Car insurance premium rose by more than 10% in 2016

Date: 26 January 2017   |   Author: Daniel Puddicombe

The AA put the rises down to growing numbers of motorists driving without car insurance - possibly because of its rising cost - fraud, particularly whiplash claims, and rises in Insurance Premium Tax  which is set to go up by another 2% in June to 12%.

But David Brown, insurance partner at KPMG, said the cost of repairing damaged vehicles is increasing, and is more of a threat to insurance hikes than whiplash claims.

"As of a year ago, insurers were seeing 20% rises in the cost of average repairs for damage to their policyholders' cars," he said. "I expect that when new figures come out over the next few months, there may be more bad news with costlier accidental damage repairs, which may well lead to premiums suffering further upward hikes."  

Once again, young drivers, aged between 17-22, are paying the highest amounts to insure their vehicles - £1,400 a year on average.

Michael Lloyd, director of insurance at the AA, said these high premiums for young drivers are fuelling the rise in uninsured driving.

"This isn't a victimless crime because compensation for injury and damage to third parties, caused by uninsured drivers, is ultimately paid for by insurers to the tune of around £35 per policy," he said. "We join the British Insurance Brokers' Association in calling on the Government cut IPT from the premiums paid by young drivers for the first two years of their cover - which will help with the affordability of cover as they build up a no-claim bonus as well as ensure that they start driving legally."

Subscribe