Car insurance industry insiders say a massive hike in premium prices – the biggest in five years – is going to hit Brits hard. What’s a motorist to do?
According to any number of individuals claiming “insider information” about how car insurance companies are going to adjust their premium prices in the New Year, we’re possibly looking at something close to an 8 per cent rate hike coming our way in 2016. There’s a myriad of reasons at play here, but one accountancy firm says that claims costs will be driven up by out of control claims costs as well as tax hikes as well. What’s this mean for the average motorist? Well you could see car insurance rates going up by around £30. Of course since there is no such thing as an “average” driver in the UK, this figure could vary wildly – and it’s not likely to be a positive result for anyone.
EY, the accountancy firm that released one of the newest reports, pointed out that this rate hike is going to be the biggest one since 2011. Insurers are simply nowhere near the positive state they were in just two to three years ago, where the sector of a whole actually turned a profit. In fact, 2013 was the first year in two entire decades that car insurance companies actually profited, according to EY.
The new rate hike should bring in something like £900 million more in revenues for insurance providers. However, your guess is as good as mine if all this extra dosh will make a difference, as insurers are constantly whinging about how much money they lose every year thanks to massive claims costs. The biggest issue is whiplash, as the soft tissue injury is notoriously easy to claim for as there’s no real way to prove it medically; this makes it a favourite of scammers and fraudsters looking to make some quick cash. It’s not exactly helpful that petrol prices have been so low, as this means it’s less expensive to go motoring about; more Brits on the road means, statistically, more road traffic accidents – and that leads to more costly injuries or more damage to vehicles that insurers then have to foot the bill for. Combine that with the Insurance Premium Tax hike that went into effect from November of this year and it’s a perfect storm of terrible circumstances that will ruin everyone’s day, not just insurers and their bottom line.
So yes, look forward to your wallets getting drained quite efficiently when you renew your motor car insurance cover sometime in the coming year. Consider this fair warning: start saving your pennies now. Of course it might be cheaper to just sell your car and ride public transport at this point, if you’re lucky enough to live in a neighbourhood with good transport links. If not, well you’d better pinch those pennies, mate.