Comprehensive car insurance premiums grew by an average of £35 in the last quarter of 2016, pushing current rates up to the highest levels seen since 2013.
According to the AA’s British Insurance Premium Index, motorists were charged an average of £633.06 for a year of comprehensive coverage in December, which is 5.8% more than they would have been charged three months earlier.
2016 as a whole saw comprehensive premiums grow by 11.7%, continuing a trend that has been in place since 2014. Third party, fire and theft premiums, which are mostly taken out by younger drivers, grew at an even fast rate, with premiums up by 19.4% compared with 2015.
Michael Lloyd, the AA’s director of insurance, cites uninsured drivers as a key reason for the increase. “I also believe the increases in Insurance Premium Tax – which will rise another 2% in June - and fraud continue to dog the industry,” he added.
Lloyd said most fraudulent claims are linked to unnecessary payouts for whiplash. “Claiming for an injury even if none was suffered is so embedded in British culture that 44% of respondents [to a recent AA study] agreed that making a claim for injury has become ‘an easy way to make money’”, he continued.
Another factor for the rising premiums is the growing cost of average repairs. David Brown, insurance partner at KPMG UK, said “The cost of accidental damage is rising fast so fast I believe it’s becoming a much bigger threat to motor policy price inflation than whiplash.