Motorists paid an extra £40 on the average car insurance policy in 2017, as prices rose by 9% to hit record highs.
This increase takes the average premium to £481 – the highest price recorded since the Association of British Insurers (ABI) began collecting this data in 2012.
Since 2014 alone, the average cost of motor cover has leapt by 29%, according to the industry body.
The ABI puts the blame on changes to the ‘Ogden rate’, which is used to calculate compensation pay-outs to people who suffer severe or long-term injuries, which came into force in March 2017, as well on Insurance Premium Tax (IPT) rising from 10% to 12% in June 2017.
Rob Cummings, the ABI’s assistant director and head of motor and liability, comments: “The rising cost of motor insurance shows no sign of abating. Changes to how compensation pay-outs are calculated, Insurance Premium Tax, more whiplash-style claims and rising repair bills are all piling on the pressure for cash-strapped drivers.”
As such, the ABI is urging the government to reduce the cost of car insurance by reforming how the Ogden rate is calculated – something the government has already proposed changing. It also wants to see IPT frozen and reform to how whiplash claims are handled, given a rise in such claims has been pushing up premiums.
- The little-known fund to help cyclists and pedestrians knocked down by uninsured and hit-and-run drivers
Mr Cummings adds: “The Government must urgently bring forward relief for motorists by introducing its reforms to create a fairer compensation system, and tackling low value whiplash style claims without delay, as well as freezing Insurance Premium Tax.
It is time cash-strapped motorists got a break.”
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