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Car insurance premiums to skyrocket

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by David Masters
Car insurance premiums to skyrocket

The AA has told motorists to brace themselves for a sharp increase in motor insurance premiums.

Research by the organisation found the average premium for comprehensive insurance has increased by 14% in the last 12 months, the biggest rise in 15 years.

Simon Douglas, AA Insurance director, said consumers should expect to be hit by this increase when their car insurance comes up from renewal.

Premiums have risen because of increased insurance fraud, car thefts, and personal injury claims, the AA said.

In addition, insurers have seen their income from investments plummet due to the financial crisis.

This means that insurers are paying out up to £110 in claims for every £100 they receive in premiums.

“Last year one industry commentator said that premiums must increase by at least 20 per cent if the car insurance sector was to return to profitability,” Douglas said.

“At the time I thought this unlikely but it looks as if that prophecy might be fulfilled.

“Despite 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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News posted: October 26, 2009

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