Drivers in nearly all age groups are paying record amounts for their car insurance and could face further increases unless the Government takes action to reduce claims costs, the Association of British Insurers (ABI) has warned.
New figures show that between 2015 and 2016, all age groups except those under 21 – where the increasing use of telematics is keeping premiums under control – faced increases in their average premium. Those in their late 50’s and late 80’s faced the highest rises – nearly £35 in the year.
Those aged 18-20 paid the highest average premiums last year at £973, with those aged 66-70 paying the least at £260. The most recent ABI motor premium tracker for Q1 this year shows the average premium paid at £462, up by 8% since Q1 2016 and adding an extra £33 a year to the cost of insurance.
These figures pre date the Government’s decision to cut the personal injury Discount Rate which massively increases claims costs and will inevitably lead to higher premiums. Recent increases in Insurance Premium Tax will also have an impact on the cost of insurance.
ABI Director General, Huw Evans, said:
“With inflation on the rise, motor premiums at a record high and the public purse under pressure, it’s concerning that the Government have yet to commit to delivering a fairer system for setting the personal injury Discount Rate. We’re pleased the Government are going to bring forward a Civil Liability Bill to reform whiplash style personal injury compensation, but the benefits could be wiped out if they don’t defuse the Discount Rate bombshell.
“At a time when politicians from all parties are calling for additional investment in public services, setting a Discount Rate that is fair for claimants, customers and taxpayers could contribute up to £1bn a year to help fund this.”
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