Car insurance: Personal injury claims pushing up premiums
Personal injury claims to push up insurance premiums
Thursday, 08 May 2008 19:30
Car insurance premiums are due to rise as insurers face higher personal injury claims.
Premium price rises come despite a reduction in overall accidents on the road.
The total claims bill facing motor insurers will increase 28 per cent from £8.5 billion in 2007 to £10.9 billion in 2012, with personal injury claims a major factor, a market analyst group has claimed.
According to a report from Datamonitor, personal injury claims arising from road traffic accidents remain the single largest contributor to claims inflation.
Between 2002 and 2006 the total number of accidents fell from 222,000 to 189,000.
However, the average claim paid to an injured party increased from £4,277 in 2002 to £5,331 in 2006 – increasing the average motor claim cost to £1,636 in 2006.
Datamonitor financial services analyst Mahreen Hussein said: "Personal injury claims continue to constitute the largest bill for motor insurers.
"Strong rates of inflation relating to medical costs and legal costs are the primary reason behind escalating bodily injury costs which have grown significantly in recent years."
Ian Crowder at the AA explained insurance firms have been squeezed by not only rising personal injury claims and associated legal fees, but also accidental damage claims, and uninsured driving.
The AA estimates car insurance premiums have risen between five and seven per cent per annum in recent years, well below the rising costs.
However, Mr Crowder explained premiums have been kept down by the rise of comparison websites that have made consumers more sensitive to price.
"However, to get low premiums benefits are squeezed and excesses are high," he said.
He predicted a steady but not excessive rise in car insurance premiums in coming years, otherwise one or two firms, he warned, may choose to break ranks and increase costs leading to others to follow.
Sarah Routledge. Additional reporting Daniel Barnes