The past few weeks have seen a number of stories emerge from various leading insurers concerning rising car insurance premiums. During September 2007 we read:
‘Admiral Warns on Motor Premium Rises’
Admiral has added its voice to those predicting that car insurance premiums are likely to rise ahead of inflation in the coming year. The insurer, which specialises in selling policies to drivers who generally pay higher premiums, has already increased motor premiums by over 5% this year.
Or, July 2007:
‘Car insurance policies ‘at two-year high’
The cost of a car insurance policy in the direct market is at its highest amount in two years, it has been claimed. According to Experian’s Motor Insurance Benchmark, the average market quote is up 7.9 per cent for May 2007 compared with prices a year earlier.
It added that the cost of cover has gone up from £519 to £560 over the period, with the average amount charged through an intermediary also up to £529.
Sound familiar? Consider this story which hit the Guardian headlines in 2006:
‘Car Insurance Costs Set to Increase’
Drivers today faced the prospect of more expensive car insurance as the UK’s biggest insurer Norwich Union announced it was increasing premiums and said other companies were likely to follow suit. Norwich Union is increasing the cost of insurance across the board, with customers facing an average 16% rise in the price of an annual policy.
Already the Royal Bank of Scotland has raised its car insurance premiums on all new business by 5% over the past few months and it seems committed to the trend by adding a further 1% per month over the next six months.
I am sure if you dig further back through 2005, 2004 and further back you will find similar stories being peddled by leading insurers and research organisations.
What is the motivation for these continuous press releases of imminent motor premium rises? We know that the car insurance market in the UK is becoming increasingly competitive with insurers struggling to make money during the first year.
What other factors are driving this strategy of ramping up premiums? Perhaps the unsustainable realities of consumers chasing the cheapest motor quote with insurers blindly chasing the signature of each new policyholder are starting to hit home in the boardrooms of car insurance companies up and down the UK!?