Car insurance premiums have risen by almost £82 on average over the past year, with the blame falling on increased taxes, excess whiplash claims and price comparison websites.
The AA’s latest British Insurance Premium Index shows that typical premium quotes have risen by 3.7% over the last quarter and 16.3% over the past year. The index uses a pool of customers nationwide to obtain quotes to track prices throughout the year.
Michael Lloyd, the AA’s director of insurance, attributed the rise to three main causes. Two increases in Insurance Premium Tax (IPT) in the past year have added around £18 to the average premium, prompting Lloyd to urge chancellor Philip Hammond to “keep his hands off” when he makes his autumn statement on 23 November.
“We are witnessing sustained price increases once again, which is bad news for drivers,” Lloyd said. “Motor insurance is a mandatory requirement and there is absolutely no justification for further hikes in IPT in the autumn statement. Coupled with predictive price increases, an additional tax burden would simply add to the growing number of uninsured drivers.”
Lloyd also highlighted the continuing costs of the whiplash “epidemic”, as well as the impact of price comparison websites on the insurance industry.
“In August, almost 70,000 small injury claims (of up to £25,000) were made, and more than 839,000 over 12 months, of which around 750,000 were for whiplash,” he said. “The whiplash epidemic has dogged the British motor insurance industry for a decade and continues to do so.
“Drivers are still being pressured into making claims for often minor collisions that they might have forgotten about. This is pushing up claims costs because insurers can’t prove that an injury wasn’t suffered.”