Car cover costs may spiral yet again

Car insurance premiums are higher in the UK than in much of mainland Europe.

Premiums in the UK are already higher than in most other European cultures because of a “claims culture” and prices could spiral again unless more action is taken to identify fraudulent claims, the AA warned.

The culture of claiming for non-injury accidents is being encouraged by cold-calls from claims management firms, said AA Insurance managing director Janet Connor.

“While the number of crashes on Britain’s roads has fallen, the number of injury claims has risen,” she said, adding: “My greatest fear is that if insurance fraud such as whiplash injury claims isn’t brought under control and quickly, we will see a repeat of the spiralling premiums of 2010 and 2011 when the cost of the average policy rose by over 40 per cent in just 12 months.”

High insurance premiums are also attributed to “crash for cash” road accidents. York-based Aviva reported a 21 per cent rise in organised fraud cases compared with 2013, with Leeds and Bradford two local hotspots.

However, insurance premiums have fallen recently, the AA said, with average prices for annual comprehensive cover £530.47 in the first three months of this year - 5.8 per cent lower than the first three months of 2014. Third-party insurance averaged £731 - down 5.9 per cent.

Drivers aged 23-29 have experienced the biggest annual falls, with their average insurance 9.3 per cent lower than in the first three months of last year.

Nevertheless, Ms Connor warned: “We’re starting to see insurers quoting higher prices and I think that’s the beginning of a trend, but the market remains very competitive.”