Thanks to the insurance premium tax going up this January, the battle to find discount car insurance may be getting harder to win by some.
The tax adds an additional 1 per cent to the cost of motor car insurance. While the first quarter of every year has traditionally been flat industry experts feel that car insurance rates may rise in 2011’s first quarter.
The high rates consumers experienced last year have worked to correct reserves. However the problems caused by claims inflation and fraud linker to this day. Many experts blame the co-called ‘compensation culture,’ calling for the UK government to find new ways to control it.
There are indications that the worst of the insurance rate hike is in the past. Analysts predict that the total rise in rates will continue much more slowly until competition begins to work to keep them in an equilibrium.
However the EU Advocate General has recently called for the end of car insurance rate calculation through gender specificity. If this were to be adopted in the UK it could mean that women would be subjected to highly increased rates. The AA has been urging the Coalition government to be as resistant as possible to the new regulations since women statistically make smaller and fewer insurance claims than their male counterparts.
The change would not be immediate if the EU ruling became law, however. The industry would be subject to a three year grace period to adapt.
Home insurance should also continue rising as well, experts say. Despite the rising prices home cover is representative of good value. Home insurance rates have risen only 20 per cent since 1994, and most of the hikes have occurred only in recent years. Despite the rise in price, the cost of contents cover has changed but little.