The Automobile Association (the AA), which currently provides car insurance, breakdown cover, loans, motoring advice, driving lessons, and other services to UK motorists, has warned that the cost of car insurance could climb by as much as 10% in the year ahead. Despite their prediction that car insurance costs will steadily rise, the auto services giant is saying the cost of home insurance premiums is unlikely to change.
A newly released index that highlights the cheapest deals currently available on the UK market has revealed a rise in the cost of annual comprehensive motor trade insurance. According to the statistics, costs grew by 0.2%, that’s around £540, in the latter stages of last year. For a while, it looked as though the price of car insurance premiums would continue to decline due to an industry-wide crackdown on falsified whiplash claims, and people trying to fraudulently cash exaggerated hire car and repair bills. Both of these activities cause premiums to swell, and the crackdown on these bogus claims had a positive effect on costs, leading to a three year fall in the price of premiums.
As a result, UK drivers have been enjoying cheaper insurances costs and (as we reported recently) plummeting petrol prices. The worm could be about to turn, however, with the AA warning that current rates may be “as good as it gets” for the time being.
Janet Connor, AA Insurance’s managing director, said: “Some insurers may have lost business by increasing premiums, leading to a ‘year-end sale’ to boost market share, so car insurance is still very good value.” She continued: “Nevertheless the underlying trend is upward, although I think premiums will struggle to rise past 10% by the end of the year.”
She went on to point the finger of blame at the rising number of personal injury claims, which are currently even higher than before the recent round of reforms was put into action. As a result of this, she said, sustaining current premiums will be impossible.
Even though its last stab at tackling injury claims didn’t have the desired long-term results, the government isn’t giving up, and will soon announce a new set of proposals that ban people from making personal injury claims if they haven’t undergone a thorough medical assessment.