The cost of car insurance in the UK has rocketed to an average of more than £1000 a year, according to a recent study by the AA. The car insurance market is struggling with some providers hiking their premiums in the face of “crash for cash” scams while others slashing their prices to attract new customers.
The AA British Insurance Premium Index has found that the UK car insurance industry is coming under pressure following “excessive” number of whiplash claims combined with continued bad weather. This is reflected in figures that show the average of prices for the five cheapest premiums catering to comprehensive cover soared by an astonishing 8.5% year-on-year, reaching a staggering £1034 for annual cover.
The spike is being felt the most by young drivers with premiums for men aged 17 to 22 at £2792 in the second quarter this year, while women in the same age group also felt the rise in costs with premiums now at an average of £1995.
Director of AA Insurance Simon Douglas said: “Competitive pressure is leading some companies to make big premium cuts on price comparison sites so that they can increase their portfolio of customers. While this is great news for consumers, they need to make sure they’re getting good cover, not just a good price.”
And it’s not just the increase in whiplash claims that push premiums upwards; Britain’s recent spate of bad weather has also been affecting premium prices. “The kind of weather that has been battering Britain recently reflects an increasingly unpredictable pattern that insurers need to take account of when setting their premiums. They need to have adequate reserves in order to meet future claims,” explains Mr Douglas.
While Manchester and Liverpool, also home to clusters of claim management companies (CMCs), saw the largest increase in premiums at an average of £1648, Scotland remains the region with the most inexpensive car insurance policies with an average lowest quote of £727.