Car Insurance Average Premium Breaks the GBP1,000 Barrier

One of the UK’s leading taxi insurance and private hire insurance providers has provided their thoughts on latest reports from the AA of insurance premiums breaking the GBP1,000 barrier.

The AA reports that the average quoted premium for annual comprehensive car insurance increased over the last quarter of 2009 by 7.2% to just over GBP1,000 which they say is a record increase for any single quarter. The “Shoparound” premium, an index of the cheapest quotes, rose even more spectacularly by over 11%. The price-comparison websites did not fare any better with increases of 12.7% for both comprehensive and TPF&T covers. The findings show that over the last year the average quoted premium for comprehensive car insurance has increased by 18% which is by far the largest annual increase recorded since the index started in 1994.

Simon Douglas, director of AA Insurance, blames the sharp rises on escalating claims settlement costs and a spiralling of personal injury claims. He said “Many insurers have been reporting significant rises in personal injury claims. Many people seem willing to pursue claims for even minor injuries, such as mild whiplash pain, that in the past they wouldn’t have bothered claiming for. This is encouraged by personal injury claims lawyers whose marketing urges people to make claims and whose costs, as well as compensation for the claim, are met by the third party insurer.”

He went on to say “The cost of accident damage has also been rising steadily, despite a fall in the number of accidents on Britain’s roads. The spate of collisions during the recent wintry spells, resulting in about 30% more claims than normal, may reverse that trend over the short term though.”

A spokesman for Staveley Head said “This will not herald the end of significant ongoing increases in car insurance premiums. The industry, belatedly, started to put its house in order towards the back end of 2009 with substantial increases to off-set the underwriting losses which had continually been made in recent years. But premiums still fall short of the levels required to put many insurers back into underwriting profit. Zurich have already announce their intention to increase their personal lines motor rates by 20% before the end of April, and other insurers are sure to follow despite their protestation to the contrary. Many do not have any other option.”

Contacts: Staveley Head Ashley Peters 0800 023 7213 [email protected]

SOURCE: Staveley Head