Why the car insurance price
increase in
2011 will be around 20%
- includes the main
causes of the escalating cost of car insurance in the UK
16 Jan 2011
by Donald MacKenzie
Taking account of the
current price readjustment and inflationary pressures on car insurance,
we would expect a car insurance price increase in 2011 (on top of the
40% increase of 2010) of around 20%.
Drivers under the age of 25 that saw a 50% price hike in their car
insurance premium in 2010 can expect their 2011 increase similarly to
be closer to 25%.
To find out more about why and how the following have contributed to
this continuing rise in the cost of car insurance in this country,
check out our other car
insurance blog posts in
relation to these topics:
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The 15 causes of
the
rising cost of
car insurance in the UK
- increasing cost of personal injury claims
- increasing numbers of uninsured drivers
- high levels of fronting
whereby parent claims to be primary driver for under-25
- non-disclosure
of previous driving offences
- non-disclosure
of previous claims
- increasing accident-related fraud including cash for crash,
staged accidents, phantom passengers, faked soft tissue injuires
especially whiplash, and recycling of a written-off car
- price readjustment following years of non-profitable low prices
to compete on price comparison sites
- referral
fees
including for legal services and credit car hire companies
- non-competitively-priced
courtesy car hire leasing usually set up via a third party,
typically a claims management company
- costly legal
fees especially in complex claims, exacerbated by car insurance companies failing to accept
liability during the three month protocol period when legal
costs are fixed
- Drop in
insurance company income from premium investment from 10-15%
five years ago to 5% now
- Double
recovery
fees when police clear car from roadside followed by car
collection by the car insurance company when the latter could have
collected the car dircely from the roadside. Police usually collect a
commission from the recover company that increases the cost
- Driving license points
swapping where a driver is then deemed to be lower risk
- Lying to
validate claims, for example, not disclosing that keys were left
in a car that is stolen
- Including the curent, two harsh winters that led to a
significant increase in claims owing to snow and ice. Poor road
clearance and treatment by highway and local authorities in some areas
contributed to this, a situation that led to the resignation of the
Transport Minister in Scotland
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