Cut-price car insurance rates were the simplest way for several new insurers to make a grab for market share from the larger companies. However, financial experts say that doing so left the remainder of the market no choice but to adjust their own prices downwards in order to remain competitive.
This was good news for consumers in the short term, yet something had to give in the long term; now all of us are stuck with having to pay more in premiums whilst car insurance companies seek to regain a portion of their missing profits.
According to recently published research, young motorists are being hit especialy hard. New drivers will now have to afford as much as £2,000 – and sometimes more – in order to ensure a small hatchback.
12 months ago, the same model car – a Ford Ka – cost but £900 to insure, for instance. However now if a newly qualified driver wished to secure cover they have to shell out at least £1,900 for even the smallest car out there.
Direct Line underwriting and pricing director, Andy Goldby, remarked that the increase in the number of accident claims with personal injuries has had a startling effect on premium prices, as more than £2.7 million is paid to personal injury lawyers per day.