You can’t say you have not been warned. The Association of British Insurers (ABI) has gone on record several times to describe motor insurance as at record levels and warning of further hikes if claims costs were not reduced.
Indeed, the average price hit a record high last quarter at £484, according to a report by Reuters. It said premiums were up 4.8% from the £462 average price for the first quarter of 2017.
When compared to the second quarter of last year, the rise in average motor insurance premiums was 11%. This is said to be the fastest year-on-year climb ever recorded.
“The rapid increase follows the recent government decision to drastically cut the personal injury discount rate. Insurance Premium Tax (IPT) also went up from 10% to 12% on June 01,” said the ABI, as quoted by the report.
The Ogden rate, or the discount rate, used in calculating compensation payments for personal injury claims was adjusted last February from 2.5% to -0.75%, driving a significant rise in premiums.
Earlier this month ABI director general Huw Evans commented that while they are pleased with the Civil Liability Bill, the benefits could be wiped out if the “discount rate bombshell” is not defused.
According to the ABI, increases in motor insurance premiums will likely be followed by further increases between now and the beginning of 2018.
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