Data released recently by the insurance industry shows motor insurance premiums are on the rise. The British Insurance Premium Index has shown that premiums have increased by over 5.5% in the last 12% months.
After several years of the motor insurance industry breaking even insurers are now prepared for losses following a surge in payments for motor claims. Indeed Ernst and Young estimate that for every £1.00 spent on insurance premiums 5p will be lost on claims and other expenses, meaning premiums will need to be increased to offset this loss.
The motor insurance industry is looking at a variety of reasons why claims have risen to about £12bn a year with analysts specifically identifying the cost of smaller claims.
Focusing on smaller claims the insurance industry has outlined that vehicles are costlier to repair today with their inbuilt electronic systems, and advancements of heated windows, parking sensors and on board entertainment centres.
Equally, the reduction in fuel costs could even been partly responsible for more accidents overall as people use their vehicles more and for longer periods.
In terms of personal injury claims, the Government and insurers had announced improvements to the management of these type claims in the last few years, but it appears whiplash claims have risen by 12% in the last twelve months. In response to the anticipated improvements insurers had reduced premiums in the expectation that claims would reduce. Now in the face of little to no improvement the insurers initial reduction will only have exacerbated the losses they are expected to endure.
Motor insurance is a notoriously competitive market with customers moving freely between insurer to insurer to make savings as the insurers themselves market predominantly on price. With the anticipated increase in motor insurance premiums because of losses and the hike in Insurance Premium Tax in November (Insurance Premium Tax Rise – News Story 17/08/2015) people will be scrutinising their insurance costs even more.
It is paramount that any premium saving is not made in spite of the cover or quality of the insurer. As an insurance broker that works with a variety of policies and insurers we experience that there is a real difference both in terms of cover and claims services and that initial perceived premium saving could be lost if placed with the wrong company.
We believe that with the expected rise in premiums this is all the more reason to use an insurance broker like us at Sharrocks, who will check the insurance market each year, recommend the right policy and insurer and assist you in the event of a claim.