Daily Insurance Industry News
 
 
Daily Insurance Industry News
Monday 11th of December 2017
July 20, 2010

Increasing fraud leads to rising car premiums

by Richard Kilner

Story link: Increasing fraud leads to rising car premiums

Increasing fraud leads to rising car premiums

The AA British Insurance Premium Index has discovered that fraud is fuelling a surge in car insurance premiums, which are now rising faster than ever before.

In the second quarter of 2010 premiums increased by 11%, the largest rise in the Index’s 16 year history.

The average Shoparound premium hit the £704 mark for an annual comprehensive car policy, up 11.5% in the course of the quarter.

Policies sold via price comparison sites increased on an even greater scale, up 12.7%, with premiums for third party, fire and theft cover (TPFT) up 15.9% generally and 17.1% on comparison websites.

Edmund King, AA president, has stated that the British Crime Survey’s findings that crime is falling misses the rise of fraud through providing false information or claiming for fake injuries.

King went on to state that obtaining a quote online was easier than ever before, and that it was simple to get a lower premium by providing inaccurate information.

However, this quick and easy was to lower premiums is fraudulent, and has caused insurers to increase premiums generally to cover the cost.

In 2009 the cost of paying claims was 22% greater than premium income, a gap that insurers are intent upon closing.

Car insurers are also often subject to another form of fraud, namely fronting.

Fronting involves parents pretending to be the principle driver of an offspring’s car, in order to acquire lower insurance premiums.

The illegal practice is widepsread, with two out of five parents partaking of it according to Co-operative Insurance, and can end up costing a substantial sum in the case of an accident as coverage may be rendered void.

 

News posted:



Related stories to Increasing fraud leads to rising car premiums: