According to recent reports of the UK-based news site, the cost of car insurance in the UK has soared by 11% over the past year, which is nearly four times the rate of inflation. This has taken the cost of car insurance to a new record high. As per the reports of the Association of British Insurers, the drivers in the UK are paying an average of over £484 for an annual insurance policy, which is up £48 in the last 12 months.
This could be the reason for the sudden change in cost of Motor Insurance
This 11% increase in the cost of the car insurance is the highest year-on-year rise since the ABI started tracking premiums for private cars in 2012. The reports by different news sites have mostly blamed the increase on the cost to the hike in insurance premium tax and changes to compensation rules. In the first quarter of 2017, the price paid for comprehensive car insurance was £462, which rose to £473 in April, £480 in May and £498 in June. The given data shows an average of £484 over the second quarter.
The analysis by consumer organization that will be published tomorrow found that older drivers have been hit the hardest. Also, the analysis found that failing to shop around could cost motorists, who are around 65, as much as £500 a year. On June 1, the hike in premium partly reflected a rise in insurance premium tax from 10% to 12%, said the ABI.
The tax that is applied to 50 million home, private medical and car insurance policies has almost doubled since 2015. According to personal injury lawyers, victims of accidents have been undercompensated for years. Also, repairs to sensors, cameras and other hi-tech technologies can cost the driver thousands of pounds. “This dramatic increase drives home how important it is the government press ahead with a new framework for the discount rate and call a stop to further hikes in insurance premium tax,” said Huw Evans, the director general of ABI.
Car insurance could rise in early 2018 as well
Car insurance premiums would hike even more next year in January when most of the reinsurance renewals take place, said the ABI. The motor premium tracker was the only published measure of the actual premiums that was paid by customers, instead of quotes, noted the ABI. ABI’s director general added, “The UK is one of the most competitive motor insurance markets in the world, but the unprecedented increase in claims costs is driving up prices to record levels. Most younger and older drivers are likely to face increases even higher than this, hurting people who can least afford it.”
He further said, “Worryingly these increases are unlikely to be the end of the road if reinsurance premiums go up at the end of the year, adding further costs to insurers.” The analysis and figures of the ABI are published on the day of a House of Lords debate on the decision of the government in February to reduce the personal injury discount rate from 075% to 2.5%. The 0.75% is the lowest in any advanced economy.