Motor premiums caught in ‘perfect storm’
The Association of British Insurers (ABI) has responded to the continual rise in motor insurance premiums by publishing a five-point plan intended to tackle spiralling costs.
Called Lifting the Bonnet, the report identifies five clear steps that could lower premiums. These are: personal injury compensation reform; no more Insurance Premium Tax rises; improved safety for young drivers; compulsory driver-assistance systems in cars; and a crackdown on insurance fraud.
James Dalton, ABI’s director of general insurance policy, said, ‘Every motorist wants competitively priced insurance that meets their needs. Consumers benefit from a very competitive insurance market, but insurers are facing the perfect storm of rising costs from personal injury claims, repair bills and Insurance Premium Tax.
‘This report highlights what insurers are doing to help keep the costs of motor insurance down, and what more needs to be done to ensure honest motorists get the best possible motor insurance deal.’
In further detail, the five steps Lifting the Bonnet identifies are:
Reforms to the personal injury compensation system. Bodily injury claims make up 37% of insurers’ costs. The government had planned to introduce stricter measures surrounding soft tissue claims but has since cooled on the idea. The ABI believes this delay is costing motorists nearly £3m a day.
IPT has jumped by two thirds in less than a year. The ABI says these recent rises alone are likely to add an extra £16 a year to the cost of the average comprehensive motor policy.
Young drivers are by far the most at-risk group on the roads. The ABI suggests a change to the way young drivers are taught, with the introduction of a Graduated Driver License.
It also argues for the compulsory introduction of driver assist systems such as Autonomous Emergency Braking (AEB), which is proven to reduce the frequency and severity of vehicle collisions.
Meanwhile, the ABI recorded 70,000 fraudulent motor claims last year, valued at £800m. A further clampdown could reduce premiums and the ABI believes the government should implement the recommendations of the Insurance Fraud Taskforce.
Motor insurance premiums have risen an average of £100 this year and the price of the average policy is expected to soar to more than £700 by the end of the year.