The era of cheap car insurance could well have come to a close with data for the third quarter showing the first quarterly rise in premiums seen in over 2 years.
According to the AAís British Insurance Premium Index, the cheapest car insurance premiums increased by 1.2% in cost to £531 in Q3, which equals an extra £6 on top of an average fully comp policy.
This is an upwards trajectory in car costs which the AA indicates is set to continue, as highlighted by the 4.2% average increase in all car insurance premiums, not only the inexpensive ones, to £891 over the same 3 months to September.
Average premiums are still far more affordable than last year, at 14.4% or £89 less expensive, largely as a result of the fierce price war that raged on between insurers over the past 12 months.
Despite this, ministers will be grim-faced upon hearing news of rising premiums once more, as they have actively sought to tackle the UKís ìcompensation cultureî by cracking down on shady third party injury claims, apparently to no avail.
Government curtailed the amount Lawyers can take in fees following a successful case, saving both claimants and insurers cash who would otherwise bear the brunt of expense. The administrative process in its entirety was simplified, with the discontinuation of referral fees between a number of parties including the much maligned claims firms, preventing them from profiteering of the backs of unwitting policy holders.
However, the AA implied that these reforms have been inadequate in the diminishing of fraudulent, overstated claims, as underlined by the numerous insurers stating that there has been no slowdown in the number of petty ëcrash for cashí claims directed at them ñ claims based on contrived situations whereby a motorist will calculatingly brake with the intention of the unsuspecting car behind crashing into the decelerating vehicle.
Tricks missed by policymakers in the handling of fraudulent injury claims, according to the AA, include the prohibition of whiplash claims being made in instances of low speed crashes and the payment of compensation to medical providers in successful injury cases as opposed to lump sums paid directly to the claimants themselves.
Janet Connor, managing director of AA Insurance, bemoaned governmentís handling of Britainís worsening compensation woes.
Ms Connor said: ‘Insurers reduced prices in anticipation that the reforms promised by the Ministry of Justice would cut the number of fraudulent and exaggerated personal injury claims ñ particularly whiplash injury.
‘But the truth is, falling premiums had more to do with competitive tension than any benefit afforded by reforms. Premiums are, on average, now similar to their 2010 level and are no longer economically sustainable.’
Due to policymakersí failure to address the mushrooming problem of mendacious injury claims, Ms Connor believes insurers will tentatively push their premiumsí prices up in the coming months, and she retains a gloomy sense of hope that these will not accelerate in the amount they grow by and become reminiscent of the terrible value tendered to motorists only a couple of years ago.
The Association of British Insurers (ABI) reported that there were over 180,000 fraudulent attempts to acquire a better deal last year, with motorists leaving out previous convictions or lying about their financial circumstances.
Such claims add a projected £90 to the average cost of yearly premiums.
The AA hyped the potential impact of a new scheme, known as MyLicence, which would see car owners obligated to submit their driving licence number in any car insurance application and is hoped to curtail the amount of fibs told by those seeking a cheaper deal.
Lawyer Alicia Alinia of law firm Slater & Gordon, questioned the scrutiny levelled at the legal profession in the governmentís perceived ineffective measures: ‘We are concerned that insurance premiums continue to rise despite legal costs in all claims having significantly reduced following a raft of legislative changes.
‘For the first time in ten years there has been a reduction in motor insurance claims yet the insurance industry fail to pass on these savings to the motorist.
‘So far the industry have remained silent on calls to work with the legal profession and provide transparent data on instances of fraud. There needs to be greater scrutiny of the insurance industry as to the real cause of the increasing rise in insurance premiums.’
However, younger drivers can take heart from data showing that those aged between 17 and 22 have seen their premiums fall by almost 20% in the last 12 months, saving them a shade over £300 on an annual basis.
North West England, due to it being a hotspot for car insurance fraud, remains the least affordable region to insure your car, whilst Wales is the only area in the UK where premiums have dropped albeit by a meagre £1 on a quarterly basis.
News of car insurance premiums was sweet music to investors ears, as shares in British insurers rocketed following the AAís release of their index.
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