What’s to blame
Car insurance premiums are rising at the fastest rate ever according to the Association of British Insurers (ABI).
The ABI released figures that show the average bill for an annual car insurance policy has hit a record high of £484, which is an 11 per cent year on year increase and around four times the rate of inflation.
This is the biggest rise since the ABI began tracking premiums for private cars in 2012 and means UK drivers are paying up to £48 more than last year.
The ABI blames the rapid increase on the Government’s decision to cut the personal injury discount earlier this year, which increases the level of pay-outs to claimants but means insurers pass on the extra cost pushing up premiums, and the increase in insurance premium tax which went up from 10% to 12% in June.
Huw Evans, director general of the ABI said that whilst the UK is one of the most competitive motor insurance markets in the world the unprecedented increase in claims is driving up prices to record levels.
He believes that younger and older drivers will be hardest hit and will face even higher increases.
He said: “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.”
“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,” he added.