Personal, commercial and fleet insurance saw consistent premium increases throughout the year, but especially in Q4
Biba and Acturis’ latest price index has shown that premiums have risen “dramatically” for all types of motor insurance in the final quarter of 2017.
Car and van drivers have been affected the most. After their premiums rose consistently throughout the year, Q4 results showed 10.7% (car) and 9.1% (van) increases over the same period in 2016 before Insurance Premium Tax (IPT) is added.
Biba cites increasing whiplash fraud claims as a major factor in the rise. It says that in 2016, the cost of motor insurance fraud alone reached £780m through more than 68,000 cases, estimated to add approximately £50 to the honest motorist’s premium.
It also says the discount rate cut has had an effect, saying this led to claims figures needing to be increased to reflect the change. It says this has been reflected in the cost of motor insurance over the second half of 2017.
Finally, it says the current IPT rate means that the average car driver pays nearly £60 in tax. SMEs, on the other hand, could be forking out nearly £200 in tax just to insure their van.
Graeme Trudgill, Biba executive director said: “There are a number of reasons that motor insurance premiums have risen and Biba is campaigning on all of them. We are pushing for legislation to be passed via the Financial Guidance and Claims Bill which will bring Claims Management Companies under the regulatory auspices of the FCA.
“We also await the progress of the Civil Liability Bill to enable the recommendations of the Insurance Fraud Taskforce to be implemented; which will reduce the rate of fraudulent claims.
“We also fed into the Government review of changes to the compensation discount rate and are calling for legislation to be brought forward that will implement changes that will ensure the principle to the 100% compensation for injury claims is met.
“And finally, BIBA has long campaigned for a fair system of taxation. We believe that Insurance Premium Tax is a tax on protection and is now at a level that impacts the uptake of insurance. We want the Chancellor of the Exchequer to commit to no further increases in this regressive tax.”
Theo Duchen, co-chief executive at Acturis said: “The figures from the last two quarters of 2017 on private car and commercial vehicle premiums are clear. These are big increases for any individual or business to swallow. We are in a period of great uncertainty in the UK and I support BIBA’s call for a period of stability with no further changes to Insurance Premium Tax.”