Car Insurance -
Car Insurance Premium May Face Large Increase - 21/04/2008
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Insurers may be compelled to raise car insurance premiums as a result of increases in costs, AA Insurance has warned.
But AA admitted that rate at which the premiums increase is at the moment slowed, which it said is certainly going to change due to the rise in insurers’ costs.
The Insurance company’s chief executive, Andrew Strong reminded that March usually sees higher increase in car insurance sales and that it’s time when many companies hold rates to gain market share. “But insurers continue to be squeezed between increasing costs such as legal expenses and personal injury claims, and competitive pressure,” he said.
He explained that car insurers spend more to get less in terms of premiums, stressing that “for every £100 taken in premiums, the industry shells out £112 in claims.”
He warned that unless premiums keep rising gradually at a pace he called realistic, there would be a sudden huge rise at some point, which would hurt customers and dent the image of the industry.
The latest average quote for home insurance premium, argued the insurer, is at £209, the price it was at the end of last year, while content insurance rose by just 1 per cent to £129.
Mr Strong however denied the speculation that home insurance premiums will hit the sky as a fallout of last summer’s floods, adding that he anticipates that the premium will keep rising till the end of the year.
The average annual comprehensive car insurance premium stands now at £682, about £37 more than this time last year and £3 less than it was at the end of 2007.
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