Young drivers are feeling the pinch as motor insurance premiums sky rocket.
One young lady saw her third party fire and theft premium increase by a whopping 20%; from £442 to £552.29, despite her being entitled to a no claims bonus for another year. Paying more than £10 per week for car insurance is an expense many young people simply can’t afford, so increasingly they are not taking out any form of motor insurance.
Insurance companies claim that for every £100 they collect in premiums, £122 is paid out as a result of claims that can include personal injury compensation. Despite the huge increases, the motor insurance industry is still predicting an underwriting loss for 2010 of £1 billion.
One industry expert explained that many motorists see insurance as nothing more than a short term way of saving money. During the recession, some dishonest motorists sought to raise funds by staging phoney accidents or hiring a personal injury solicitor to make an exaggerated personal injury claim. Add to this the facts that firms like Claims Direct advertise no win, no fee services, and compensation awards have risen to record levels, and it’s easy to see why insurers’ costs have dramatically increased.
One insurance broker said that 7 years ago, only 20% of car drivers put in a claim for a non-fault injury; now 60% of motorists do so. An even for horrifying statistic is that for every £1 collected in premiums by Esure in the B31 postcode district of Birmingham, £3 is paid out in personal injury claims.