Average car insurance now more than £1,000
The average cost of car insurance is now £1,034, breaking the £1,000 barrier for the first time, according to the AA British insurance premium index.
Motor insurance is now 8.5 per cent higher than it was a year ago and has doubled in price over four years.
In July 2008 the average fully comprehensive policy cost just £509.
Young male drivers have been hit the hardest by the price rise, with premiums for young male drivers up the age of 22 now reaching £2,792 on average.
On a regional basis, Greater Manchester and Liverpool are most affected by soaring premiums, while Scotland is the cheapest region in which to buy car insurance.
The Office of Fair Trading is launching an investigation in business practices that could be artificially inflating the price of policies.
It will look into the system of referral payments, and excessively high repair and car-hire costs.
Insurers have experienced an increase in fraudulent claims, where applicants give false information in order to reduce the price of their policy.
Simon Douglas, director of AA Insurance, said: “We expect the industry eventually to have routine access to DVLA data and the sooner this happens the better.
“It will allow fraudulent applications to be weeded out.
“Insurance companies are already exchanging information about people who appear to be manipulating data in order to cut the price quoted.”
The ‘compensation culture’ has contributed to the increase in the cost of car insurance, with the number of bogus whiplash claims soaring.
It is estimated that whiplash claims now cost insurers around £2 billion a year, adding around £90 to the cost of every car insurance policy.
The rising number of whiplash claims has prompted some GPs to start charging patients £21 to diagnose the condition, according to a recent report in the Mail Online.
Doctors are allowed to charge for providing treatment after traffic accidents under the Road Traffic Act 1988.