UK vehicle insurance rates to rise
A new report has said private motor vehicle insurance premium rates are forecast to rise in 2016.
Data analysts Timetric found there was a premium rate increase rise during 2015, and that the market is expected to grow to a market worth of £8.9billion in the next five years. It is expected, however, that rises will be restricted by strong competition, the rise of aggregators and regulatory pressure to lower premiums.
Higher premiums and the rising cost of claims are expected to lead recovery in premium volumes. This forecast rise comes after growing competition and measures to combat false or exaggerated whiplash claims lead to motor insurance gross written premiums declining 10.6% in 2013, and a further 2.1% drop in 2014 to £8.2billion.
The category is expected to remain stable, with a compound annual growth rate (CAGR) of 1.1% over the next five years. It is also expected that comprehensive motor insurance premiums are expected to grow at a CAGR of 1.3%, reaching £8.2 billion in 2019.
By contrast, non-comprehensive premiums are expected to decline further, as the high cost of personal injury claims makes it expensive for insurers to provide third-party cover. The sub-category is expected to fall at a forecast-period CAGR of 1.1%, to £538.2 million in 2019.
Timetric’s Insurance Analyst Laura Balkarova said, ‘Due to the cyclical nature of the market, car insurance prices are rising again, with claims inflation and insurance fraud expected to lead to further upward premium pressure.
‘Claims trends and an increase in the insurance premium tax (IPT) are expected to continue to challenge motor insurers going forward. The government and the ABI are expected to work together to cut the excessive costs within the industry and stop fraudsters.’