Car Insurance Premiums See Record Rise
New research has revealed car insurance premiums have risen by a record 14%, with experts warning further increases are on the way.
The figures are part of the AAís British Insurance Premium Index and reveal that the average cost of premiums for comprehensive motor cover have seen a hike of almost 6% in just three months to the end of September ñ the biggest increase the motoring group has seen in 15 years.
Director of AA Car Insurance, Simon Douglas, said: ìMost drivers will be seeing sharp increases when they renew their annual insurance premiums. The index suggests that 89% of insurers have increased their premiums by more than £5 over the past quarter. Only 2.5% reduced them.”
Reasons for the sharp hike have been attributed to the rising cost of personal injury claims, fraud and an
increasing number of uninsured drivers.
Douglas revealed that such is the current state of the market that £110 is being handed out to drivers involved in accidents or thefts for every £100 the firms are making through policy fees.
The AA said young drivers could feel the pinch more than others, with premiums for third party, fire and theft insurance ñ the most commonly purchased by new drivers – having jumped by 9.3% during the third quarter of the year and by 17.6% during the past year to an average of £1,059.
Douglas said this would not be the end of the price hikes and suggested that premiums will rise by around 20% in order to stabilise a sector, which has seen widespread unprofitability during the recession.
He said: ìCar insurers are facing fast rising costs, reserves for paying claims are depleted and investment income has fallen, largely because of the recession.
ìDespite motor insurance being one of the most competitive markets in the UK, insurers have little choice but to put premiums up.”
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