AA says car insurance to remain unprofitable in 2009

by Richard Kilner

Story link: AA says car insurance to remain unprofitable in 2009

Datamonitor today claimed that in 2009 the UK motor insurance industry will make a profit.

However, it has been refuted by AA Insurance who cite rising claims costs coupled with high competitiveness which provide twofold pressure to both increase costs to cover the higher payouts and to lower costs to maintain a competitive edge.

The firm’s chief executive officer, Andrew Strong, states that the inflation of claims costs is about 5% per annum for vehicles and property, and 10% for injury.

The competitive nature of the insurance marketplace is being strengthened by the online providers, making it easier than ever before for consumers to browse for the best deal.