CAR INSURANCE NEWS ROUNDUP: 7 DAYS ENDING 7 MAY 2014:
Car insurance companies have bravely tightened their belts in the wake of a tiny dip in profitability even as a reversal is predicted for the future.
You have to hand it to insurers: they really know how to lay it on thick. This week the martyrs of the car insurance industry were wailing and gnashing their teeth over how ‘extreme competition’ saw their first quarter income drop by around 10 per cent – surely a terrible blow to an industry that makes millions in profits year-on-year.
It’s true to some extent that motor car insurance costs are down, as research from the AA has found that the price of an average comprehensive cover is around £100 less expensive than it was last year. Some of this is indeed from competitive pressures, but let’s not forget how carefully the insurance industry cracks down on fraudulent and spurious claims as well. With the elimination of major crash for cash organised crime rings, wholesale costs for insurers are down and sometimes they have no choice but to pass on that savings to their customers, even though they’d rather keep it for themselves.
Meanwhile insurance professionals have seen the writing on the wall when it comes to the market and quite a few are predicting better business conditions on the horizon. Well, better conditions for the industry – which of course translates to higher premiums for you and me but let’s not split hairs here shall we?
In fact, anew survey of more than 100 insurance brokers found that 35 per cent of respondents are convinced that by 2020 revenues will be up by as much as 10 per cent. Another 19 per cent said that the revenue increases will likely be closer to 15 per cent overall. In other words, more than half of the brokers surveyed think that profits will increase by the end of the decade.
So prepare yourselves now ladies and gentlemen! Start stockpiling vast sums of cash so you can afford your 2020 premium payment. Better yet, sell your car and invest in a horse-drawn carriage. It’s probably going to be less expensive to stable a horse than it will be to fill your car with petrol by then anyway.