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Daily Insurance Industry News
Wednesday 22nd of May 2019
January 7, 2009

Sharp rise in car premiums forecast

by Gill Montia

Story link: Sharp rise in car premiums forecast

Sharp rise in car premiums forecast Sharp rise in car premiums forecast

A leading broker has warned that car insurance premiums could rise by a record 20% during 2009.

Swinton Group’s chief executive, Patrick Smith, believes that premiums are seriously adrift and 20% lower than they should be.

He is expecting a significant correction this year, which could see the cost of the average motor policy rise by around £80.

Increased fraud and the rising cost of personal injury claims could mean that the average premium for a driver with full no claims bonus will rise from £400 to around £480.

According to the AA, fraud costs around £30 for every private car insurance policy in force, a rise of 17% over the past year.

Meanwhile, the impact of law firms offering “no-win, no-fee” services is adding to the upward pressure on premiums, as are higher medical costs.

However, the AA is more optimistic than the Swinton chief about car insurance costs in 2009 and expects rises to be in the region of 10% or 11%.

The organisation estimates that at present, for every £100 spent on premiums, insurers pay out approximately £105.

 

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