Insurance premiums on the up
Motor insurance premiums have hit their highest recorded levels last quarter and rose more than five times the rate of inflation in 2016.
The ABI claims the new high is a result of tax increases, increased repair costs and the rising costs of whiplash style injury claims putting pressure on premiums. It claims the average repair bill has risen by nearly 32% in the last three years to £1,678 in Q3 2016. This is due to increasingly complex vehicle technology and rising cost of spare parts due to currency fluctuations.
The ABI’s Motor Premium Tracker shows that in the fourth quarter of 2016 the average price paid for private comprehensive insurance was £462 – the highest figure previously recorded was £443, in Q2 2012. This was up 4.9% on the previous quarter, adding an extra £22 to the average premium. The average premium over the whole of 2016 is now 9.3% higher than the average premium over the whole of 2015.
Rob Cummings, ABI’s assistant director, head of motor and liability, said, ‘These continue to be tough times for honest motorists. They are bearing the brunt of a cocktail of rising costs associated with increasing whiplash style claims, rising repair bills and a higher rate of Insurance Premium Tax.
‘While we support the Government’s further reforms to tackle lower value whiplash costs, it must not give with one hand and take away with the other. The sudden decision to review the discount rate has the potential to turn a drama into a crisis, with a significant cut throwing fuel on the fire in terms of premiums.
‘Insurers are open to a proper dialogue on how to reform the system and urge the Lord Chancellor to engage with the industry about setting a rate that is fair for both claimants and customers.’