Car insurance costs are set to rise again in 2013 as the price of re-insurance (that’s insurers’ insurance) has pushed up outgoings for underwriters by nearly 20%.
But WHY is insurers’ insurance rising and why does the average motorists have to cover the cost?
Sadly, it seems whiplash is again partly at fault. Insurance broker Willis Re recently singled out the UK motor sector as the area of the market that will experience the most significant price rises – and, in part, it’s a result of the soaring number of fraudulent whiplash claims.
Even if the government is planning a backlash on whiplash, the chances are your premiums will still be pushed up.
Insurers are also worried about genuine legal cases and claims for compensation as a result of a life-changing accident.
One of the biggest payouts of its type in the UK came in November 2012 when a 17-year-old girl was awarded a £7.25 million lump sum, plus a further £270,000 a year for the rest of her life after a road traffic accident left her paralysed.
These periodic payment orders have grown in number to around 400 since 2008, with predictions that precedents set by past cases could potentially open the floodgates.
Motor insurance companies in the UK that have experienced large enough losses to trigger these re-insurance payouts have in turn had their insurance costs inflated by as much as 35%.
While drivers won’t have to cover that entire rise, they could still have to face as much as a 10% increase.
Don’t forget female drivers either, who are already experiencing inflated car insurance after a European Union anti gender discrimination act came into force in December last year (RAC blog - How will women’s car cover be affected by new insurance laws). The combination of these factors could all soon make motor cover prohibitively expensive.
Can anything be done to combat the inexorable rise of car insurance premiums? In short: no. Little will stop the rise. However, there are a few tips you can employ to quash costs as much as possible.
Improving safety and driving standards behind the wheel with one of these on board and keeping away from accident black spots – as well as not travelling at peak or traditional high-risk times – is a sure-fire way towards saving money, too.