Fraud is helping to push car insurance premiums up at their fastest-ever rate, according to the latest AA British Insurance Premium Index.
During the quarter ending 30th June, premiums rocketed by more than 11% – the biggest increase recorded by the benchmark study since it started tracking quarterly car and home insurance premium trends 16 years ago.
The index’s average Shoparound premium topped £704 for an annual comprehensive car policy, up 11.5% in just three months. The previous biggest increase was only six months ago.
The Shoparound average for policies sold through price comparison sites rose even more sharply, by 12.7%.
Shoparound premiums for third party, fire and theft cover (TPFT), often bought by young drivers, climbed by 15.9% and by 17.1% on the price comparison site Index.
Edmund King, AA president, says: “The latest British Crime Survey suggests that crime levels are falling, but crucially, it misses a new 21st-century wave of fraud such as providing false information and claiming for non-existent personal injuries which just isn’t being picked up.”
He points out that premiums on price comparison sites have been rising fastest. “It’s now much easier to get an insurance quote on-line, for example, comparison sites can enable dishonest individuals to manipulate information to get a lower premium. Insurers are increasingly charging higher prices to these people to cover the increased fraud risk.”
“This quarter’s record increase comes on top of previous record rises. For those shopping on comparison sites, average premiums have climbed by an eye-watering 32.8% – or £193 – in just nine months. Even those taking the cheapest prices have typically seen them rise by £98.”
“Last year, the cost of meeting claims exceeded premium income by 22% and the spiralling increases we’re seeing show that insurers are trying to fill that chasm.”