Higher taxes and whiplash claims have pushed the average car insurance premium up by 8% over the last year, adding £34 to the average annual cost for drivers, according to the Association of British Insurers. The increases takes the typical premium to £462, the highest level since the ABI started collecting the quarterly data in 2012. “This reflects continuing cost pressures around rises in whiplash-related claims, Insurance Premium Tax and increasing repair bills.” Since IPT was introduced in 1994 at 2.5% it has been steadily increased by successive chancellors. It has been hiked three times in the past two years: the last rise of 0.5% took the rate to 10% while in June it will rise again to 12%, making “higher insurance bills for many look inevitable,” says the ABI. But price comparison websites say premiums are higher than the ABI suggests. Confused.com said that prices have risen by 16% over the past year, with the average premium for comprehensive cover now £781. “Coupled with hikes in road tax for new cars and petrol prices rising since the start of 2017, it’s likely that many drivers will feel the cost of motoring burning a sizeable hole in their pockets,” said a spokesperson. The change to the way in which compensation for serious personal injuries is calculated – the so-called Ogden discount rate – is also likely to lead to big additional costs, says the ABI. “Further increases could come as insurance renewals are due in early July or at the beginning of 2018, feed through to premiums insurers have to charge,” said Rob Cummings, the ABI’s assistant director and head of motor and liability.
Car insurance premiums in the UK have risen 8% in two years to the highest level since at least 2012, according to the Association of British Insurers (ABI) The ABI attributes the £34 annual increase to higher taxes and whiplash claims. Average premiums are now £462, the most since the ABI began collecting the data, and will rise again as the government plans to lift the insurance premium tax to 12% from 10%, the fourth rise in the past year. Price comparison websites say the increase in premium costs has been even greater, with Confused.com putting the figure at 16%.