SOURCE: ABI
Insurance premiums have
reached their highest recorded level, according to the ABI. The insurance body
says the increase has been caused by the combined effect of a rise in repair
costs, increases in Insurance Premium Tax and a continued rise in whiplash-style
claims.
Premiums rose by more than
five times the rate of inflation in 2016, with the average premium now costing
£462. Further rises could come if the Ministry of Justice goes
ahead with plans to reduce the discount rate for insurance payouts.
One reason
for the increase in premiums is a rise in the cost of repairs because of cars’
increasingly sophisticated electronics. Another is that buying spare parts is getting
more expensive because of the weakness of the pound. The average repair bill
has risen by 32 per cent in the past three years, the ABI said.
Rob Cummings, the ABI’s assistant director and head of
motor and liability, said: “These continue to be tough times for honest
motorists. They are bearing the brunt of a cocktail of rising costs associated
with increasing whiplash-style claims, rising repair bills and a higher rate of
Insurance Premium Tax.
"The
sudden decision to review the discount rate has the potential to turn a drama
into a crisis, with a significant cut throwing fuel on the fire in terms of
premiums.”
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