Insurance News Release
14 January 2009
Car insurance
CAR INSURANCE HITS NEW HIGH AND RISING, AA INDEX SHOWS
Car insurance premiums took another sharp upward jump over the last three months of
2008, rising by an average of almost 1 per cent per month, according to the latest
benchmark British Insurance Premium Index from the AA.
The average quoted premium for an annual comprehensive car insurance policy
based on over 80 quotes for each ‘customer’ in a basket of 1,000 risks, has risen by 2.9
per cent since October to a new high of £741.66
The Shoparound premium, an average of the lowest three quotes for each risk,
rose by 2.5 per cent over the same period.
Index figures for third party, fire and theft insurance – which is typically bought
by young drivers – rose by 3.4 per cent to £931.31 for the average quoted premium while
the Shoparound figure rose by 3.0 per cent to £618.91.
Over the past year, the average quoted premium for comprehensive insurance in
the Index has risen by 8.7 per cent while the Shoparound index, which is closer to the
premium that buyers can expect to pay for their cover, rose by 7.2 per cent.
“We expect this upward trend to accelerate,” says Simon Douglas, director of AA
Insurance. “Although the bank base rate has fallen and there is widespread price-cutting
across credit-crunch Britain, the costs insurers face are rising fast. Personal injury claims
and their associated legal expenses rose by around 22 per cent last year to about £6.16bn*
and are expected to hit £10.9bn by 2012**. Whiplash injury alone represents around £66
for every car insurance policy sold. In addition, detected insurance fraud rose by around
17 per cent during 2008*. All this is added to the expected 6 per cent increase in the cost
of repairing accident-damaged cars so the insurance industry is under considerable
financial pressure.”
Simon Douglas adds: “Capital is also scarce within the current economic climate
and some insurers will need to respond by reducing the