On average it costs £892 a year for comprehensive cover in the UK. With estimates of around 30 per cent for 2011’s total rate increases, this could bring a motorist’s motor car insurance costs to £1,159.60.
Car insurance companies say that for every £1 in premiums taken in, £1.20 goes out in order to pay personal injury claims. Financial services firm Deloitte remarked that, as insurers attempt to recover from their losses, the price of an average policy will undoubtedly increase even further.
As claims management firms drum up business through text messaging and telephone calls – quite often for accidents that occurred as much as three years prior – insurance providers are being inundated with approximately 200 road traffic accident injury claims on a daily basis. Moreover, the AA recently stated that the UK’s number of whiplash injury claims is four times higher than any other European country.
One Association of British Insurers spokesman, Malcolm Tarling, remarked that honest customers will continue to receive the short end of the stick whilst the industry has to deal with frauds, liars, and ambulance chasers. Personal injury firms have begun to encourage people into submitting exaggerated and frivolous claims, added Mr Tarling, as many see the phenomenon as a sure-fire way to make some extra cash.
In order to recover shortfalls, insurance providers have had to continually raise their rates, Mr Tarling said. Insurers also need to pay legal costs in addition to any compensation awards, he added, and oftentimes these fees are completely out of proportion to the claim.