Motor insurance costs rise again due to an increase in personal injury claims

For the past three years, British drivers have been benefiting from falling car insurance premiums due to the increasing competition between insurers and the ease of comparing quotes on comparison websites. However, this is now set to change. According to the AA, who have been tracking costs and running an insurance premium index for 21 years, prices have risen by 5.5% in the past year. The average quote for a typical comprehensive policy in Britain has now climbed to £549.46, and is expected to continue increasing.

The Association of British Insurers (ABI) suggest that this price rise is due to an increase in the compensation culture of Britain. The ABI have stated that the number of road accident related personal injury claims, such as whiplash, was 12% higher during the 12 months ending in April 2015 than in the previous year. Alternatively, the AA suggests that the price rise is due to the unsustainable nature of companies constantly undercutting each other’s prices, leading to them rarely making an underwriting profit. However, both associations have welcomed the increased focus on claim management companies who encourage falsified injury claims. 17-22 year olds are still paying the highest premiums, at an average of £1241.81 per year, however it is drivers aged 23-29 who have seen the biggest rise in the last quarter, of 6.2% to £682.62. Those aged 70 and up are the cheapest to insure, with average premiums of just £392.13. Age is not the only factor taken into consideration when insurers calculate a quote, the average price also varies by location. Those living in north-west England pay the most annually for car insurance, with an average cost of £795.05, followed by London and Yorkshire where average prices are £660.25 and £617.69 respectively. Those living in Scotland are currently paying the least, at £381.87, but unfortunately costs are predicted to continue rising throughout Britain.Insurance premium tax is set to rise from 6% to 9.5%, which will increase the prices of all insurance, including car insurance. The AA cautions that this may further increase premiums due to more people shopping around for insurance, leading to companies rethinking introductory offers and their general pricing. They also suggest that the overall increase in car insurance may lead to more people driving without insurance, which is illegal in the UK. An increase in uninsured drivers, which have been falling in recent years, will in turn lead to an additional increase in premiums due to the added costs associated with being in a road traffic incident with an uninsured driver. Driving without insurance can lead to an unlimited fine and disqualification from driving, so the increase in average premiums is something drivers will just have to endure.

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