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Motor insurance - climbing premiums and fraudulent activity
Joe Ryan contributed of the writing of this blog
Motorists have enjoyed a solid two years of reduced insurance premiums. Recent figures published by the Association of British Insurers (ABI) reveal, however, that the average comprehensive private motor insurance premium for Q2-2015 has climbed by 2.1% to £367. Are the tables starting to turn for motor insurance?
The ABI has released its motor insurance premium figures for the second quarter of 2015. The average comprehensive private motor insurance premium has increased by 2.1% to £367. The AA’s British insurance premium index supports this finding of motor premium rises. The AA’s index found that the average quote for a typical comprehensive motor insurance policy has ascended 5.2% to £549.46. The historical findings by the AA’s index can be seen here.
Motorists have enjoyed a solid two years of reduced insurance premiums. Average premiums are lower today due to a combination of market pressures and Government reforms into the civil justice system. These reforms have reduced the fixed legal fees for personal injury claims, and hence reduced the financial burden upon insurers. As a result, we have seen insurers pass £1.1 billion of savings to motorists over the last two years.
"Motor premiums could be set to rise due to improving economic conditions and the imminent increase in insurance premium tax"
The current results from the ABI and AA indicate that the tables may have started to turn for motorists. We could see premiums continue to climb, what with improving economic conditions and the impending increase in insurance premium tax in November 2015.
The ABI has also unveiled that fraudulent action in this sector is still on the rise. Over 4,000 fraudulent motor insurance applications are discovered every week. Motorists are trying to cut corners by inputting inaccurate information into online application forms in order to receive cheaper insurance quotes. Examples of common falsehoods that are being seen are:
- failing to disclose previous claims
- providing a false address for a lower risk area
- parents insuring a vehicle in their name which is mainly driven by their child
Motor insurance initiatives such as MyLicence and the Insurance Fraud Register have been launched with the aim of tackling this fraudulent culture. Previously, insurers would inspect individual driving records through the Drive and Vehicle Licensing Agency (DVLA), which was time-consuming and expensive. These new initiatives allow insurers easy access to an individual’s motoring history and hence enables them to more swiftly and accurately identify any bogus applications. Since the launch of MyLicence at the end of 2014, there has been an 18% increase in the number of identified fraudulent motor insurance applications.
Could this be the start of another three consecutive years of motor premium rises? And could we start to see the fraudulent culture finally curbed? The largest concern to motor insurers remains the level of claims. Tighter regulation, improvements in fraud detection and an improving economy could all affect how the path of motor premiums unwinds.
Key takeaways
- as at Q2-2015, the average comprehensive private motor insurance premium is £367
- this is a 2.1% increase from the previous quarter
- motor premiums could be set to rise due to improving economic conditions and the imminent increase in insurance premium tax
- over 4,000 fraudulent motor insurance applications n are discovered every week
- initiatives such as MyLicence and the Insurance Fraud Register are aiming to tackle this fraudulent culture
