Car insurance premiums rising at fastest ever rate

Car insurance premiums rising at fastest ever rate

The insurance industry has warned that drivers are contending with the fastest year-on-year rise in premiums since records began.

The Association of British Insurers (ABI) say that the average car insurance premium has risen by 11 per cent over the last year, with an annual policy typically costing £484.

Earlier this month, the ABI said car insurance premiums had already hit a record high in 2016.

It is expected that this will only increase the already substantial pressure being placed on the government, as campaigners look to force them into reverse its decision to reduce the discount rate.

The decision was intended to increase pay-outs to victims of accidents, but has had the knock-on effect of raising insurance premiums.

According to the ABI, the change has been the main cause of the rising cost of insurance, but it has also been exacerbated by the 2 per cent increase in insurance
premium tax.

The API has called for the government to review the system used to calculate compensation payments, which the Ministry of Justice has already consulted on with no decision announced as yet.

“This dramatic increase drives home how important it is the government press ahead with a new framework for the discount rate and call a stop to further hikes in insurance premium tax,” said Huw Evans, director general of the ABI.

“Most younger and older drivers are likely to face increases even higher than this, hurting people who can least afford it,” he said.

However, personal injury lawyers have accused insurers of under-paying victims.

“During this time insurers quietly reaped the financial benefits of not having to pay what they owe to people with life-long, life-changing injuries,” said Brett Dixon, president of the Association of Personal Injury Lawyers.

“Yet the insurance industry has been vociferous in blaming the correction for rising motor premiums. It is scandalous that the blame for the mismanagement of the discount rate is being put at the door of seriously injured people.”

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