Car insurance set to rocket in 2009
With news that car insurance premiums rose by 11% in 2008 the AA has put drivers on red alert for a similar rise in 2009. There would appear to be a number of issues which have come into play over the last 12 months and which could continue for some time to come. The average annual premium for comprehensive car insurance increased by 1.3% in the first three months of 2009 and now stands at just over £750.
Insurers are claiming that increased theft, higher fraud figures and personal injury claims together with significant legal expenses have forced them to review premiums. There has also been a significant reduction in investment income, with stock markets around the world falling substantially over the last 18 months. Interestingly, the industry claims that for every £100 in premiums received from car insurance the sector is paying out around £105 in claims.
While many will dispute the claim figures, there is no doubt that investment income has fallen substantially over the last 18 months. It is also worth considering that the increase in the first quarter of 2009 was the first increase in the first three months of any year for six years. How ironic that premiums are going up as consumers struggle to cover their everyday living costs.
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