Car insurance premiums hit record highs
No-one likes to be told that their outgoings could potentially increase but it seems that for many motorists, this could soon be the case if recent
research is anything to go by. According to the AA's market analysis of the car insurance market, car insurance premiums are rising at a record rate
and faster than at any time over the past 15 years. Its latest British Insurance Premium Index which tracks the quarterly movement of car insurance
quotes, has shown the greatest ever annual increase in car insurance premiums since the index started in 1994.
Staggeringly, it claims 14 per cent has been added to the average comprehensive premium in the last 12 months. This means the average quoted
premium for an annual comprehensive car insurance policy now stands at over £821, (October 2009) compared with £778 in July 2009
and £721 in October 2008.*
What does this mean for car insurance premiums?
Well, the director of AA Insurance, Simon Douglas says it is likely most drivers will see sharp increases when they renew their annual insurance
premiums. He said: "The index suggests that 89 per cent of insurers have increased their premiums by more than £5 over the past quarter.
Only 2.5 per cent reduced them."
Broken down, it seems the category of drivers most likely to be affected by a price hike is young drivers. The AA index suggests that third party, fire
& theft premiums typically bought by young drivers rocketed 9.3 per cent in the three month period ending 30 September, 2009 and 17.6 per cent
over the year to an average quote premium of £1,059.
What's driving up premiums?
According to the AA, car insurance providers are facing rising costs as reserves for paying claims have depleted, largely because of the recession.
Douglas explained: "I estimate that across the industry, up to £110 is being paid in claims for every £100 taken in premiums - a situation
that is clearly unsustainable. Despite motor insurance being one of