AA warns motor insurers face uphill battle to raise premiums

 
Caitlin Morrison
Follow Caitlin
CAR INSURANCE prices edged up slightly in the last quarter of 2014, while home insurance costs have been flat for the past three months.

According to the AA’s British insurance premium index, average quoted insurance premiums went up by 0.2 per cent in the three months to 31 December, compared with a rise of 1.2 per cent in the preceding quarter. Premiums are still 10 per cent cheaper than they were at this time last year.

Drivers in London saw the average premium go up by 0.6 per cent to £648.73 in the final quarter of 2014, which was 9.1 per cent less than they paid in the last quarter of 2013.

Janet Connor, managing director of AA Insurance, said she expected insurers to continue to push for premium increases but added: “I think premiums will struggle to rise past 10 per cent by the end of the year.”

She also stated that premium falls over the past couple of years have had more to do with competitive pressure than benefit brought by the Ministry of Justice in its Legal Aid, Sentencing and Punishment of Offenders reforms, aimed at cutting fraudulent and exaggerated personal injury claims.

“The facts speak for themselves. The number of personal injury claims is now higher than before the Justice Ministry reforms were introduced. As a result, current premiums are simply unsustainable,” she said.

Meanwhile, the average quote for a combined home buildings and contents insurance policy stands at £163.06, up by just 5p on the previous quarter, although down 5.3 per cent from a year ago.

Connor said that 2014 had ended positively for home insurers, and that premiums may be levelling off after a long-term downward trend.

Related articles