A COLD snap this winter is the least of motor insurers' worries as they start 2000.

Claims inflation in the sector is set to rise by up to 15% next year, according to analysts.

This follows Ogden, NHS treatment charges and planned changes to personal injury awards.

In addition, the government is believed to be planning an increase in general pain and suffering awards in personal injury cases of up to 60% this year.

Joanna Parsons, an analyst at HSBC Investment Bank, said motor insurers' fear that bad weather could send private motor claims spiralling.

Parsons said claims inflation has been feeding into the motor market: "We are increasingly becoming a litigious society and that is reflected in rate rises of up to three per cent a month. The sentiment across the motor market is that similar increases are needed to keep pace with claims."

Insurance analyst Nick Ferrier at Raphael, Zorn, Hemsley, said the private motor market saw rises of up to 25% in 1999.

But he said even these increases have been overtaken by parts of the fleet and commercial sectors where premiums have leapt by 100%.

Mike Brockman, a partner in analysts English Matthews and Brockman, commented: "Life is becoming rosier from a profitability outlook, but there is still has a long way to go."

He expects it will be 2001 before rises begin to feed through into balance sheets.


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