Motor premiums reached a record highest level in the fourth quarter of 2016
Motor premiums hit their highest recorded levels last quarter and rose more than five times the rate of inflation in 2016, as tax increases, increased repair costs and the rising costs of whiplash style injury claims puts pressure on premiums, the ABI reported.
And the insurance industry body warned that further increases could come as the Ministry of Justice cuts the discount rate for insurance payouts – a mechanism used by the courts to adjust large compensation payments to take account of future investment returns.
The ABI’s Motor Premium Tracker shows that the average price paid for private comprehensive insurance in the fourth quarter was £462. That beats the previous highest figure of £443 in the second quarter of 2012.
The premium was up 4.9% on the third quarter, adding an extra £22 to the average premium: the second highest quarterly increase recorded.
The average premium over the whole of 2016 is now 9.3% higher than the average premium over the whole of 2015, ABI said.
“These continue to be tough times for honest motorists,” said ABI’s assistant director and head of motor and liability. “They are bearing the brunt of a cocktail of rising costs associated with increasing whiplash style claims, rising repair bills and a higher rate of Insurance Premium Tax.”