Car insurance rates set to exceed £1k within a year

One motoring expert has recently announced that due to runaway costs caused by rising levels of fraud and so-called ‘ambulance chasing’ behaviour, car insurance rates are set to exceed £1,000 by the end of the year.

The AA stated that even discount car insurance premiums have risen by an average of 40 per cent over the past 12 months – which represents the largest annual increase since the association began keeping records in 1994.  The increase resulted in adding an average of £255 to comprehensive motor car insurance cover; now the average motorist pays £890 in insurance premiums.

However the AA states that this figure is set to increase by another 20 per cent by the end of 2011.  This could raise the average premium price to an eye-watering £1.070 and make motoring too expensive a proposition for many lower-income drivers.

Coverage costs have been driven up by an increase in fraud activities such as staged accidents, said the AA.  The motoring organisation also laid the blame at the feet of what they branded as ‘ambulance-chasing’ solicitor firms fueling an increase in personal injury claims related to road traffic accidents.

An additional cost was recently identified as well in the form of referral kickbacks.  Many car insurance companies have been receiving referral payments from claims management companies for forwarding the personal information of those reported to be involved in car accidents. News of the activity led Transport Minister to condemn the practice as ‘abhorrent.’

The Transport Select Committee was highly critical of the referral practice last month.  The practice of selling personal details of accident victims – sometimes within hours of a reported accident – results in motorists being bombarded with hard-sell calls from claims management and solicitor firms looking to make some quick cash.

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