UK motorists can expect further rises in the cost of their insurance premiums over the next two years, according to seven in 10 insurance leaders – and more than a quarter predict hikes of more than 15%, new research has revealed.
Insurance board directors and department heads from the UK, mainland Europe, and the US pointed to the UK as the region where premiums are expected to rise most sharply, a poll from The Floow found.
The cost of car repairs (39%), claims fraud (29%) and a higher frequency of claims (28%) were highlighted as key factors driving the trend for climbing premiums by the 280 insurance chiefs surveyed.
They identified under-25s and over-75s as the age groups most at risk of price hikes, as well as pointing to taxi drivers, small businesses and fleet managers.
“In a market where insurance premiums are rising, agents should be seeking ways to assist their clients to reduce the impact of these rises,” David James, chief operating officer at The Floow, told Insurance Business.
James pointed to the use of telematics-based policies as a way for brokers to help policyholders manage premium costs and said that such policies will become more prevalent with the ubiquity of smartphones and the increasing use of technology in vehicles.
“Brokers may have the challenge of helping their clients to adopt the technology, but over time this leads to benefits to the end-users and an improved service from the broker. This is a model that is being adopted in the US, and we believe we will see it develop in the UK and European markets,” he said.
The Floow’s chief product officer, Andy Goldby, said that the firm’s latest research was in line with what it had seen in other reports.
“The MSM survey in January this year showed a 4% increase in the last quarter alone, with the biggest increases hitting young and old drivers,” Goldby said.
“Increases are given in the main by bodily injury claims, which tend to be bigger for the older and young more than middle aged, as well as fraudulent claims. With this, the reduction in the Ogden discount rate from 2.5% to -0.75% has exaggerated this effect, although some of this is likely to be reversed in the next 12 months.”
The fact that insurance decision makers believe that rates will continue to increase could indicate a possible lack of confidence in the forthcoming legislative changes, according to Goldby – “or it just reinforces the fact that insurers like to see the tangible results of such changes before they can reflect these in the pricing.”
