Why are car insurance prices rising?
15 February 2017 by Lauren Hancock
Between 2015 and 2016 car insurance policies nationally, on average, increased by a staggering 14%, equivalent to a £95.00 increase per policy. The average quoted premium, for an annual comprehensive car insurance policy, during the period was an eye watering £767.00.
Insurers have been quick to blame an increase in the number of personal injury whiplash claims for this upturn, but what is the real reason behind the premium hike?
Whilst, the number of claims registered as a result of motor vehicle incidents during the year 2015/16 minimally increased upon those registered during the previous year, the total for the period remained lower than that for any other year between 2010 and 2014. In fact, the total number of motor vehicle claims registered for the year remained more than 55,000 lower than those registered in 2011, when figures reached their peak. It seems impossible then that an increase in motor claims is the sole reason for the premium hike.
A more obvious factor, also cited by insurers is the latest increase in insurance premium tax. The standard rate for insurance premium tax now sits at a record high of 10% (set to increase to 12% later this year), compared with just 2.5% on its introduction in 1994. With only minimal increases between 1994 and 2010, from 2.5% to 5%, the rapid increase in tax since then has of course led to an increase in consumer premiums.
Equally significant is the considerable increase in the cost of vehicle repairs over recent years. With constant developments in vehicle technology and rising costs of replacement parts, the average repair bill has risen by almost 32% in the last 3 years. In the third quarter of 2016, the average repair bill totalled £1,678.00. It is no wonder then, that with such rapid increase in the cost of repair, there too comes an increase in consumer premiums.
Whilst the mainstream media is keen for us to blame the year on year increase in insurance premiums on those who suffer injury as a result of accidents on the UK’s roads, the truth is rather different.
The figures are clear in that overall the number of motor vehicle claims has decreased considerably since 2011. Meanwhile, the level of insurance premium tax and cost of vehicle repairs continues to increase disproportionately every year. Whilst a variety of factors have contributed to the latest increases in premiums, it is obvious that the blame does not solely rest with those who claim as a result of genuine injury.
We at Fisher Jones Greenwood LLP recognise the physical, psychological and financial repercussions that sustaining a personal injury may cause. If you have suffered an injury as a result of an accident in the past 3 years that was not your fault and wish to consider making a claim, please contact Chris Yemm on 01206 217524.
RT @FJGFoundation: Join us for a night at the races with the FJG Foundation - Friday 5th May, 7.30pm at the Colchester Masonic Hall #charit…2 days