Injuries and fraud increase car insurance 40pc

CAR insurance premiums have soared by a record 40 per cent during the past year as high levels of fraud and personal injury claims continue to push up the cost of cover.
By The Newsroom
Published 13th Apr 2011, 11:50 BST

The average cost of a comprehensive policy, based on the three most competitive quotes available, reached £892 at the end of March, 40.1 per cent more than a year earlier and the biggest annual rise recorded by the AA since it started the index in 1994.

Younger drivers continued to bear the brunt of the increases, with the cost of comprehensive cover for those aged between 17 and 22 jumping by 64 per cent to average £2,431, rising to £3,052 for young men.

Hide Ad
Hide Ad

The biggest increase was to third party, fire and theft cover, policies that are often taken out by young drivers who cannot afford comprehensive cover, with premiums soaring by 82.1 per cent to £1,533 as insurers continued to leave the market, reducing competition.

The AA said the main factors pushing up the costs were fraud and personal injury claims.

The firm said that despite fewer collisions on UK roads, claims for whiplash injuries continued to increase, with more than 200 claims submitted a day, often for accidents that happened up to three years ago, when injuries were not mentioned at the time.

But it added that recent proposals by the Lord Chancellor Kenneth Clarke to curb the costs associated with “no-win, no-fee” claims could improve the situation.

The Association of British Insurers warned that unless action was taken to curb the cost of personal injury claims, premiums would continue to rise.