Car insurance in the UK rose 8 per cent on average to £462 in the past year, the Association of British Insurers (ABI) has revealed.
The £34 increase means that the current average premium for motorists is the highest it has been since records begin five years ago.
However, the ABI’s figures are significantly lower than figures released by Confused.com earlier this month.
Car insurance is set to rise soon anyway because of the government deciding to increase insurance premium tax (IPT) from 10 per cent to 12 per cent on 01 June.
The ABI said: “Further rising costs could spell more misery for millions of motorists. The change to the way in which compensation for serious personal injuries is calculated – the discount rate – will lead to massive additional costs for insurers.”
In February, the government announced major changes to the formula used to calculate the amount of money people suffering long-term injuries should receive. The changes resulted in the ‘discount rate’ being reduced.
Rob Cummings, of the ABI, commented on the upcoming election, saying: “The new government must push ahead with reforms to tackle low value whiplash-related claims and introduce urgent reforms to change the framework for setting the Discount Rate.”