A recent report released by the AA has discovered that a large percentage of UK car insurance groups are raising their costs to consumers whilst simultaneously scaling back any budget car insurance deals they had been offering in the past.
The report has also revealed that car insurance companies are more concerned with their eroding profit margins than driving new customer figures. As a result, prices have risen steadily over the past 12 months. Previous instances of companies offering discount car insurance have been erased by the 39.3 per cent rise of car insurance in general to £792 for an average premium. This represents the largest cover premium rise in sixteen years.
While there are a myriad of factors involved in the rate hikes, many industry insiders view the price surge is powered by an increase in the number of fraudulent accident claims, higher costs in regards to advertising in order to remain competitive in an already crowded market, and a recent surge in the number of injury and accident claims in the UK. The AA report discovered that for every £100 car insurance companies take in as premiums, the average claim is actually £123, which has prompted many analysts predict it may not be until 2015 before the insurance market is profitable again.
The report’s findings were based partly off of online comparison website Confused.com and a non-life insurance specialty consultant firm EMB. Both sources reported that the price of an average car insurance cover premium in Britain increased by a rate of 37.5 per cent.
Industry experts agree that since car insurance groups are passing along the costs of doing business to their consumers, motorists are urged to shop around in order to procure the best deals for their budgetary needs.