Car insurance premiums hit record highs
According to the Association of British Insurers (ABI), premiums rose more than five times the rate of inflation in 2016, with the average price paid for private comprehensive insurance hitting £462. The highest figure previously recorded was £443, which was registered in the second quarter of 2012.
The average premium over the whole of 2016 now stands 9.3% higher than the average premium over the whole of 2015.
“These continue to be tough times for honest motorists,” said Rob Cummings, ABI’s assistant director and head of motor and liability.
“They are bearing the brunt of a cocktail of rising costs associated with increasing whiplash claims, rising repair bills and a higher rate of Insurance Premium Tax (IPT).”
Since the Budget in July 2015 there have been three separate increases in IPT, meaning the tax will have doubled from 6% to 12% when the latest rise comes into effect on June 1 this year.
Meanwhile the average bodily injury claim settled in the third quarter of 2016 came to £10,674, which is a 2.3% increase on the same period last year. The average repair bill has risen by nearly 32% in the last three years to £1,678 in the third quarter of last year.
Cummings said: “While we support the government’s further reforms to tackle lower value whiplash costs, it must not give with one hand and take away with the other. The sudden decision to review the discount rate has the potential to turn a drama into a crisis, with a significant cut throwing fuel on the fire in terms of premiums.
“Insurers are open to a proper dialogue on how to reform the system and urge the Lord Chancellor to engage with the industry about setting a rate that is fair for both claimants and customers.“