Car Insurance and Motor Insurance premiums reach record levels

Car Insurance and Motor Insurance premiums reach record levels

    Car Insurance premiums reach record levels!

    Well we knew our car insurance premium were always on the up but the results of the latest AA British Insurance Premium Index reveal that rates have actually reached an all time high.

    Car Insurance premiums

    In the final quarter of the year the average car insurance premium for an annual comprehensive car insurance policy increased by a whopping 7.2% on the previous quarter. In real terms this meant that the average premium is now priced at around £1,000.00 per year.

    car insurance premium definition

    On an annual basis the percentage increase was 18.7% for comprehensive insurance. This is the largest increase in this area of business since the records first began back in 1994. Meanwhile the average premium for third party fire and theft increased in the same period by 8.9% to £1,252.00. Annually third party fire and theft rose by 23.8%.

    The increases have come as auto insurers have desperately struggled to make up for a lack of reserves which have slowly been exhausted during the economic downturn. Other factors such as steep rises in settlement costs and an increase in the frequency of personal injury claims can also be attributed to the sociological effects of the recession and are also driving the premiums sky high.
    The report has been released at a time that most composite insurers are either actively increasing rates or at least discussing it, but the strategies are varied and diverse.
    Zurich have taken the impulsive decision to implement a blanket rate increase on its private motor book, a bold move which has certainly caught the market off guard. The Swiss insurer announced it intended to push forward with sharp increases in personal lines motor expected to be in the region of 20% in the broker channel.

    Head of personal lines at Zurich’s broker division, Mark Coffey said:

    “We have not aimed our increases at specific brokers or segments of the market – they are right across the piece. The majority of the increase will come in March and the remainder will follow in April.”

    He concluded “It is an industry problem – not specific to Zurich – so I will be intrigued to see how other insurers react.” And they were queuing up to respond too...

    An Aviva spokesperson commented that “no plans for blanket motor premium increases”. And added that “Aviva’s motor pricing strategy is still tailored to the individual – we seek to recognise better risks with more competitive pricing,”

    A spokesperson for Car Insurance comparison website said, “ We’ve been predicting this for a long time now – the underwriting Insurance Companies can’t keep running on a loss and eating claims reserves ad infinitum.”
    Meanwhile both Allianz and Axa indicated prior to Zurich’s move that they will be taking some form of corrective action also.
    Gareth McChesney, head of pricing and reporting at Allianz Retail, said: “We applied some strength to our ratings in 2009. It seems others in the market are realising the severity of the situation – just six months later than we did”.

    car insurance premium average

    “In Q4 last year, the market started to correct itself and in 2010 I would expect to see that continue, certainly for the first half of the year. Zurich has put forward a hefty increase in a single month while the market is adopting slightly smaller increases, say 3-3.5%, every month to come up to an acceptable rating level,” he added.

    Inevitable yes? Necessary pretty much? Helpful as we come out of recession? I let you answer that! From the pen of Insurance Blogger.

    @Posted by
    writer and blogger, founder of buy4live .

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