Average car insurance premiums increase

Average car insurance premiums increase

11th January 2018

Reports suggest that car insurance premiums are now an average of £200 more expensive than they were five years ago.

A survey by price comparison site Compare the Market said average insurance premiums had shot up from £559 in 2012 to £758 in 2017.

It said increased Insurance Premium Tax (IPT) was one of the key reasons for the increases. When IPT was introduced in 1994, it was set at 2.5 per cent. It rose to 6 per cent by 2015 – but since then has shot up to an all-time high of 12 per cent, as of June 2017.

Of course, that doesn’t account for all of the rise. If you deduct the appropriate IPT from the figures above – 6 per cent in 2012 and 12 per cent in 2017, then the comparative premiums still come out at roughly £527 and £676.

That’s a £150 increase even if you ignore IPT.

Soft tissue claims (ie whiplash claims) are also usually cited as a factor in increasing insurance premiums – but a report in 2016 showed they too were declining in numbers.

Whiplash claims reduced

A freedom of information request by the Association of Personal Injury Lawyers (APIL) reveals that the government’s compensation recovery unit recorded 335,365 claims in 2015/16 where the compensator had used the term ‘whiplash’ within the injury description field.

In 2014/15, a total of 376,513 claims were identified in the same criteria – meaning a fall in 2016 of 11%.

The drop in claims figures is even greater compared with previous years: 2013/14 saw 410,215 specifically whiplash claims while in 2012/13 there were 488,281.

The insurance, legal and medico-legal sectors are still waiting for the precise details of the proposed reforms of soft tissue claims. There remains concern that it could limit access to justice and that bringing an effective end to claims under the value of £5,000 is an arbitrary cut-off point.