Car insurance rates in the UK are set to keep increasing in the wake of an industry-wide loss of £2 billion last year, according to one recently published study.
Accountancy firm Deloitte’s most recent study revealed that the massive loss came as insurance claims outstripped income gathered by motor car insurance income. As car insurance companies set aside more and more funds to pay possible claims in the future, Deloitte said that this will result in more impetus for insurers to continue to eliminate discount car insurance quotes in the UK.
Insurance premiums in the UK have been rising precipitously for the past three years as the industry strains against a surge in car accident claims. Many insurance experts blame the sudden glut of personal injury claims on the growing prevalence of injury lawyers who work on conditional fee arrangements, commonly referred to as ‘no win, no fee’ cases.
By the end of March, the annual comprehensive car cover price inflation rate stood at 35.7 per cent. This was down only slightly from December 2011’s inflation of 37.8 per cent, according to a joint survey conducted by consultants Towers Watson and comparison site Confused.com.
Intense competition between insurers had been driving price drops for several years. Combined with rising claims, this weakness in price has resulted in the industry taking a loss on underwriting for every year from 1994 onward according to Celent, a financial research firm.
In 2010, insurers lost an average of 20p for every pound in premium income they managed to earn. Deloitte said that the previous year’s losses were only 19p per £1.
Royal Bank of Scotland, the largest motor insurer in the UK, owns both the Direct Line and Churchill brands. Its key competition include mutually-owned Liverpool VIctoria, Aviva, RSA, and Admiral.