Drivers face insurance premium hike

Rises in car insurance premiums are set to continue in the foreseeable future, with motorists likely to face double digit price hikes, an expert has warned.

Over the past one year, the cost of comprehensivecar insurance has shot up by 40% on average, with younger drivers bearing the brunt of it - facing increases of 51%.

Rise in fraud, higher personal injury costs, an increase in claims management companies and the cost to the industry of uninsured drivers, have together led to the hike, the Transport Select Committee heard.

Duncan Anderson, of EMB Consultancy, said the sharp rise mirrored a "catch up" in insurance premiums after higher claims costs.

However, he added: "If claims continue to rise at the rate that they have been increasing, rates will continue to increase as well.

"Bodily injury claims are increasing at a rate of 30% and other claims types are increasing by 5% an annum.

"Overall there might be a 15% to 20% natural increase in claims costs if things continue as they are, which will be reflected in ever increasing premiums."

Insurance premiums have doubled since 2005, and Mr Anderson said the main driver was the increased cost of bodily injury claims, with both the number of claims and the cost per claim rising, despite the fact that the number of accidents in the UK has fallen.

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