Driver insurance premiums to rise again as insurers pour on the excuses

Car insurers are under more and more pressure to explain why they have increased customers’ premiums once again when over the past year their own profits have continued to rise.

Drivers’ annual premiums have increased to £715 on average, almost 20% higher than this time last year, when the average was only £600. This is the sharpest increase in the past five years, and it is believed that at this rate of increase, premiums could soon reach and even surpass the record levels reached in 2011.

Insurance companies of course have their excuses. A spokesman for Willis Towers Watson has claimed that the increase is down to “the cost and complexity of repairs” on modern cars. Amongst the other reasons given are a rise in fraudulent claims, and the half-per-cent tax increase that will come into effect in October 2016.

Insurance behemoths such as Admiral and Direct Line, however, made no mention of the question of fraud in their shareholders’ annual reports and have had nothing to say about the remarkable rise in premiums, despite increasing calls from accidents claims companies and personal injury claim solicitors for greater pricing transparency from insurers. Read more about how clever use of words can save you on car insurance.

It is apparently the feeling of everybody, aside from the employees of insurance companies themselves, that insurance companies are not in need of increased revenue, having seen a huge rise in profits and dividends in the past year. In 2015, Direct Line saw an increase of 14% in car insurance profits, while Admiral enjoyed an 11% increase. Furthermore, even during the economic turmoil following the result of the Brexit referendum, the share prices of car insurers have been amongst the most stable, illustrating that the market still fully expects insurers to continue to make huge profits.Read more about how will Brexit impact the cost of driving for UK motorists? 

Insurers have been further criticised for passing on the cost of the upcoming 0.5% tax increase to customers rather than simply absorbing it. The fact that they are hiking premium prices now when the lack of transparency means that no one knows what they are basing these increases on seems extremely cynical to say the least. It is certainly not the kind of behaviour one would expect of a trustworthy customer-centric sector, which is how they’ve been portrayed by the government.

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