(Reuters) – The cost of a comprehensive motor insurance policy in Britain fell 1% in the third quarter, pushed down by uncertainty from the personal injury discount rate change in July and the market watchdog’s interim report on general insurance pricing practices, a survey showed.

The average premium for a comprehensive policy is now 783 pounds ($958.24), according to the latest index from price comparison site Confused.com, compiled by insurance advisory company Willis Towers Watson Plc (WLTW.O).

Britain’s market watchdog said last week car and home insurers could avoid mandatory pricing restrictions if they voluntarily stop penalising loyal customers.

Firms use complex pricing practices that allow them to raise prices for consumers that renew with them year-on-year, known as “price walking”, the Financial Conduct Authority (FCA) said.

Prices in 2018 were also pushed down by changes in the Ogden rate used to calculate compensation for personal injuries and the Civil Liability Bill, which includes reforms likely to reduce claims for whiplash injuries.

Whiplash is a form of neck injury caused by a sudden jolt that snaps the head backwards but insurers argue that many claims in such cases are fraudulent.

Quarterly data by price comparison website MoneySuperMarket (MONY.L) showed that an average fully comprehensive premium now stands at 459 pounds, 5% lower than last year.

“One reason why average premiums have continued to drop could be that environmental concerns are prompting people to make fewer car journeys,” said Rachel Wait, consumer affairs spokesperson with MoneySuperMarket.

There were fewer new cars on the road, with a fall in need for high-value vehicles needing expensive insurance, she added.

The index, based on enquiries submitted to insurer Admiral Group’s (ADML.L) Confused.com, found that the fluctuations in premium levels in recent quarters reflect significant uncertainty in the industry caused by the Ogden rate change and the FCA’s report.

Besides those two factors, the industry is still grappling with inflation challenges and uncertainty around the impact of the Civil Liability Bill, said Graham Wright, UK Lead of P&C Personal Lines Pricing at Willis Towers Watson.

Companies such as Admiral, RSA Insurance Group Plc (RSA.L), esure, Direct Line Insurance Group Plc (DLGD.L) and Hastings Group Holdings Plc (HSTG.L) provide motor insurance for Britain’s highly competitive insurance sector.

“We still consider the UK motor insurance market to be efficient in the medium-term, and expect a faster price pick-up in the coming months. Regulatory scrutiny with respect to profitable back-books may act as a catalyst for new business pricing,” Barclays analysts said.

“The FCA has discussed measures to encourage fairer pricing for new and returning customers, so we expect to see insurers adjusting their prices. This could see prices for new customers increasing as they offset fairer premiums for renewing customers,” Wright said.

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