Well we knew our car insurance premium were always on the up but the results of the latest AA British Insurance Premium Index reveal that rates have actually reached an all time high. In the final quarter of the year the average car insurance premium for an annual comprehensive car insurance policy increased by a whopping 7.2% on the previous quarter. In real terms this meant that the average premium is now priced at around £1,000.00 per year.
On an annual basis the percentage increase was 18.7% for comprehensive insurance. This is the largest increase in this area of business since the records first began back in 1994. Meanwhile the average premium for third party fire and theft increased in the same period by 8.9% to £1,252.00. Annually third party fire and theft rose by 23.8%.
The increases have come as auto insurers have desperately struggled to make up for a lack of reserves which have slowly been exhausted during the economic downturn.
Other factors such as steep rises in settlement costs and an increase in the frequency of personal injury claims can also be attributed to the sociological effects of the recession and are also driving the premiums sky high. The report has been released at a time that most composite insurers are either actively increasing rates or at least discussing it, but the strategies are varied and diverse.
Meanwhile both Allianz and Axa indicated prior to Zurich’s move that they will be taking some form of corrective action also. Gareth McChesney, head of pricing and reporting at Allianz Retail, said: “We applied some strength to our ratings in 2009. It seems others in the market are realising the severity of the situation – just six months later than we did.” “In Q4 last year, the market started to correct itself and in 2010 I would expect to see that continue, certainly for the first half of the year. Zurich has put forward a hefty increase in a single month while the market is adopting slightly smaller increases, say 3-3.5%, every month to come up to an acceptable rating level,” he added. Inevitable yes? Necessary pretty much? Helpful as we come out of recession? I let you answer that! From the pen of Insurance Blogger Kris Oldland.
source: www.insuranceblog.co.uk
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