Car insurance set to soar to over £1,000 next year

2 minute read  |  April 27, 2017

Car insurance premiums have been on the increase for a while now and there doesn’t seem to be an end in sight for cash strapped drivers.

Comparing premiums from this year to last highlights the severity of increases:

	2016	2017
Average motor insurance premium in the UK
	£670	£781
Young drivers (aged 17-20)
Female	£1,577	£1,746
Male	£2,150	£2,363
Older drivers (aged 71 and over)
Female	£350	£421
Male	£428	£505
By area
Manchester & Merseyside	£886	£1,034
Central & North Wales	£560	£619
South West	£808	£553
Northern Ireland	£886	£943

Source: Confused.com Figures compare first quarters 2016 / 2017

Premiums are expected to rise as a result of the incoming increase to Insurance Premium Tax (IPT) – from 10 to 12 per cent in June 2017, expecting to affect around 36million general insurance policies.

The tax, panned by critics as a stealth tax on households, will see insurance companies passing on the cost to unsuspecting households by the way of car, home and medical cover.

If that’s not bad enough, insurers are now warning of a further increase due to the way in which compensation for serious personal injury pay outs are calculated.

Discount Rate

The way courts calculate serious injury compensation is to look at loss of earnings and the cost of care and then the likely interest the victim would earn, this is called the discount rate. It had previously been set at 2.5 per cent, but fell last month to -0.75 percent, meaning that insurers will need to pay more on the assumption victims are to lose money.

Layman’s terms

Regardless of the rhetoric spouted by ‘experts’ the likelihood is that insurance premiums are going to rise and there is little that can be done about it. Our advice is that when it comes time to renew, shop around. Not all insurance companies will pass on their payments to the consumer, but it may take some effort to find the ones that don’t.

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