Market's recovery moves up a gear
The private motor market’s recovery moved up a gear in the second quarter of the year, with average rates rising, a new study has found.
According to the AA’s quarterly British Insurance Premium Index, average comprehensive motor premiums rose 3% in the three months to June 2008.
The increase will be good news for the motor market, which has failed to make an underwriting profit since 1994, owing to heavy competition within the sector.
The last year has seen motor insurers increase rates in a bid to counter rising claims costs. But the recovery stalled in the first three months of 2008, when average comprehensive rates fell by 0.5%.
The AA’s latest figures show that comprehensive premiums have increased by 5.8% over the last year. The AA calculates that an annual premium increase
of 20% is needed if the private motor market is to become profitable by the end of 2009.
Average buildings insurance premiums also rose 0.5% in the second quarter of the year, according to the AA’s figures.