This year UK motorists could face significant increases in their car insurance premiums, according to leading brokers and insurers.
Estimates of the increase range between 10 and 20%, as insurers are being forced to increase revenues to offset the rising costs of personal injury claims and fraud. AA Insurance have already said that they expect their premiums to rise by 10 or 11%.
On average, for every £100 of premiums received by motor insurance companies, they pay out £105 in claims and costs. Traditionally, this has not presented a problem because they were able to invest the premiums on the share market to turn a profit. Now, however, plummeting share prices have ripped into these profits.
As the financial crisis has developed over the last year, motor insurance premiums have already begun to rise. According to a survey conducted by AA insurance, the average cost of comprehensive car insurance premiums rose 8.7% in the year to September 2008, with another estimated jump of 3% in the last quarter. Average comprehensive motor insurance premiums are now around the £500 mark.
The cost to motor insurers of accident claims has risen, but it is personal injury claims that have really rocketed. This is down to the increase in medical costs and the proliferation of ‘no win, no fee’ accident claims firms.
The UK has been labelled the ‘whiplash capital of the world’, with 430,000 claims made last year resulting in payouts of £1.9 billion. Costs to motor insurers of personal injury claims have risen by a whopping 22% over the last twelve months, and these are passed on to the motorist to the tune of about £66 per annual premium.
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2 Comments
London isn’t too bad in terms of the increase of premiums compared to some of the other areas around the UK, such as Nottingham and Liverpool. Hopefully, we won’t see too much of a premium rise leading into 2010.
Think your car insurance is over priced and expensive? Then please spare a thought for all the rich and famous people – whose bigger cars incur more insurance costs.
Madonna, who drives a BMW 745, one of her modes of transport while at home in London, fitted with a tracker would take her car cover costs to £1,000.
However, being a female driver and her age of 50-years would bring the risk of being involved in a car accident down. Although cruising around in central London would boost her cost up. She is an expensive lady didn’t you know, a material girl after all.
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