Surge in whiplash claims pushes car insurance prices up by 16%

The AA has reported that motorists face paying nearly £82 more for car insurance than a year ago, with prices predicted to continue heading upward in the near future.

The latest British Insurance Premium Index shows that typical premium quotes have risen by 16.3% over the last year. The AA attribute this upsurge to three main factors; two increases in Insurance Premium Tax (adding on about £18 per premium), the continuing cost of whiplash claims to insurers, and price comaparison sites making it ‘the norm’ to shop around annually – meaning people tend to buy insurance based on low price, rather than cover level.

The AA’s Director of Insurance, Michael Lloyd, said “We are witnessing sustained price increases once again, which is bad news for drivers. Motor insurance is a mandatory requirement and there is absolutely no justification for further hikes in IPT in the autumn statement. Coupled with predictive price increases, an additional tax burden would simply add to the growing number of uninsured drivers”.

In August, almost 70,000 claims for small injury up to £25,000 were made, and over 839,000 in the last 12 months. Of these, 750,000 were for whiplash – 89%! The Insurance Director explained the impact of these claims on the insurance industry, describing it as an epidemic: “The whiplash epidemic has dogged the British motor insurance industry for a decade and continues to do so. Drivers are still being pressured into making claims for often minor collisions that they might have forgotten about. This is pushing up claims costs because insurers can’t prove that an injury wasn’t suffered. The activities of claims firms make life more difficult for those with a genuine injury”.

Northern Ireland is the most affected area, with premiums averaging £862. Scotland is currently the cheapest, at an average of £422. Younger drivers continue to pay higher premiums than older, with the cheapest policies averaging £1,287.

A spokeperson for the ABI (Association of British Insurers), said “We also believe that delays with proposed government reforms to personal injury claims are costing motorists £3 million a day, based on the Government’s own calculations. Our report shows that personal injury claims, which make up 9% of total motor claims by number, actually account for 37% of insurers’ costs”.

Of course, one way to help combat the rising costs of driving (and help cut carbon at the same time!) is by sharing your spare seats. Work out how much you could save now on the Liftshare Savings Calculator!