Car insurance premiums in the UK are continuing to rise, according to the AA’s latest British Insurance Premium Index, which found that the average quoted premium has gone up by £82 from 12 months ago.
Shoparound figures from the report – which are an average of the five cheapest premiums for each risk – found that a comprehensive car insurance policy has increased by more than £20, to £585.84, over the three months ending 30 September, a jump of 3.7%.
Compared to a year ago, the cost has risen by 16.3%, adding almost £82 to a typical motor policy.
The AA’s director of insurance, Michael Lloyd, said that two increases in Insurance Premium Tax (IPT) over the year have added about £18 to the average car insurance premium, and urged the Chancellor to ‘keep his hands off’ in the Autumn Statement.
“Motor insurance is a mandatory requirement and there is absolutely no justification for further hikes in IPT in the Autumn Statement. Coupled with predicted price increases, any additional tax burden would simply add to the growing number of uninsured drivers,” Lloyd said.
Lloyd, who said that he couldn’t see an immediate end to the current upward trend, also blamed the continuing whiplash epidemic as well as the cost to insurers of price comparison site business as factors contributing to the trend of rising premiums.
Referencing the 750,000 whiplash claims in the last 12 months, Lloyd said: “The whiplash epidemic has dogged the British motor insurance industry for a decade and continues to do so.
“Drivers are still being pressured into making claims for often minor collisions they might have forgotten about. This is pushing up claims costs, because insurers can’t prove that an injury wasn’t suffered.”
UK drivers are also being poorly served by the structure of a market that encourages people to shop only on price, often disregarding or being unaware of the level of cover offered, Lloyd said.
“There’s little incentive for insurers to offer low, loss-making introductory quotes on price comparison sites because not only do they pay a fixed introductory fee that could be a substantial proportion of the premium, but there is little likelihood that such customers will remain.
“Customers don’t necessarily recognise that a low initial premium is a first-year introductory discount so they go elsewhere. Inevitably, this will tend to push those initial premiums up and perhaps offer greater scope for insurers to reward loyalty.”
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