Daily Insurance Industry News
 
 
Daily Insurance Industry News
Monday 20th of May 2019
July 21, 2010

Car insurance shake-out overdue

by Gill Montia

Story link: Car insurance shake-out overdue

Recent surveys illustrating the extent to which car insurance premiums have risen this year have prompted comment from 1 Answer Network spokesman, Trevor Cutts.

According to the Confused.com/EMB Car Insurance Price Index, the average cost of a comprehensive policy jumped 14.2% in the second quarter of 2010, a revelation that comes as no surprise to Mr Cutts.

He explains that insurers have long been complaining that premiums are unrealistic and figures from the Financial Services Authority show that the average private car insurer absorbed costs of £122 for every £100 of premium received in 2009.

Rising injury payouts and fraud are cited as the main reasons for insurers’ woes, which have left them digging into reserves to remain competitive.

In addition, Mr Cutts suggests: “Practices such as sub-net pricing by brokers who are using claims farming as cash cows to subsidise the losses have been manipulating the market, increasing claims and administration costs and pushing the industry towards raising premiums which, in all likelihood, will be quite substantial.”

The broker network believes a shake out in the car insurance market is overdue and is hopeful that a reliable service based on honest, profitable competition will yet emerge.

 

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