Premiums to continue rise
Car insurance premiums are set to rise by up to 29% by January 2018 according to specialist motor insurers, ERS.
It claims factors including tax increases, higher repair bills and a European court ruling will converge to increase the cost of motoring for private and commercial drivers.
ERS expects the average premium for a standard car driver to rise by £60 to £360, while a taxi driver, carrying multiple passengers throughout the day, could see their insurance premium increase by £720 a year to over £3,000. This equates to a 20% increase for a standard driver and a 29% rise for a commercial driver.
A key factor influencing premiums is the cut to the ‘Discount Rate’ – an adjustment that is applied to lump sum compensation payments for people who suffer life-changing injuries. In March this year the Ministry of Justice slashed the rate from 2.5% to -0.75%, catching the industry by surprise and costing it hundreds of millions of pounds. ERS’s analysis shows the change will make premiums £21 higher for the average driver and £330 higher for a taxi driver.
Ian Parker, chief executive of ERS, said, ‘This is a pivotal year for motor insurance, with a range of factors converging which will translate to higher premiums for every motorist.
‘We estimate the combined impact of factors including Ogden, Vnuk, claims inflation and reinsurance to premiums will lead to price increases of up to 29%, costing drivers hundreds of pounds. That increase is a bitter pill to swallow for many people who expect that the cost of their annual motor policy, without a claim, should decrease.’