Car Insurance Premiums Set To Rise in 2007
Leading UK car insurance companies have warned the industry that 2007 could witness an increase in motor premiums across the majority of driver and vehicle categories.
Many increases have been introduced since September of 2006, with Royal Bank of Scotland (RBS) being the latest big company to declare it's revised rates. RBS, the UK's second-largest insurer, lays claim to hundreds of thousands of policyholders, and recently admitted that it's prices have increased by 5% since last September (2006).
RBS has blamed spiralling costs of personal injury claims, with the associated medical bills, compensation and legal fees. It added that the industry is also facing higher bills because of the rising problem of accidents caused by drivers, mainly young men, without insurance. As a result, it has been paying out more in claims for the past four years than it has been receiving in premiums.
With the motor insurance market more competitive then ever, it seems odd that the big players in the industry should be inclined to raise their premiums. This you would think will serve only to make them more uncompetitive in the the face of growing competition.
However, big insurers such as RBS, Norwich Union and the AA are taking a calculated position that they can bring the rest of the market (premiums) up with them. Perhaps the move is an attempt to force the hand of the smaller, nimbler and often cheaper new entrants, brokers and intermediaries.
Reports towards the end of 2006 have also suggested that average car insurance premiums have crept up during this year. Figures from Sainsburys bank show that their average premium rose from £462.15 in January to £466.63 in July.
The average premium for men is now £492.77 and for women it is £428.92. Sainsbury's Bank estimates that it costs around £2,202 a year to keep a car on the road, with insurance the biggest expense after petrol.
Drivers aged 25-39 had the biggest rise in premiums in the first half of this year - rising 1.37% to an average of £576.11. Over-65s had the biggest fall, with their premiums coming down 2.3% to an average of £333.34.ENDS