As the cost of petrol continues to climb quicker than Sir Edmund Hillary, so does that of car insurance, with premiums set to rise to record highs this year.
Insurers blame the projected 30% rise in prices on ‘mercenary’ no-win, no-fee lawyers who have cost the insurance industry more than £2billion in compensation.
The AA advised that no-win, no-fee claims often command higher payouts, which are continuing to rise, and because of the aggressive marketing strategy of the lawyers, people who would not of made a claim are now being tempted to do so.
The surge in these claims now means that insurers are paying out £1.20 in claims for every £1 they make in premiums. Treading water as the sharks circle?
A report by Deloitte the financial services company advised that almost no companies are expecting to break even this year.
Insurance premiums have already risen by 10% in the last year, with the average comprehensive car insurance policy costing £892 a year. If premiums do rise as indicated, the average comprehensive car insurance premium would rise to £1,159.60, an increase of £267.60.
Insurers are receiving more and more claims each day, with some receiving 200 personal injury claims a day, from accidents that have happened up to three years ago, as no-win, no-fee lawyers continue to tout their trade.
Despite having the safest roads, the UK has four times more whiplash claims than any other county in Europe, and this is taking into consideration the UK also has lowest number of crashes per person, according to the AA.
Insurers continue to try and clamp down on fraudulent claims, but it is often more expensive to try and pursue insurance fraud than to just pay the claim.
Some no-win, no-fee firms are encouraging people to submit exaggerated and often embellished claims as there is no risk to the insured, with a potential payout of £2,340 on average. As average legal costs have also risen too, for every £1 paid in compensation, an extra 87p goes in lawyers’ fees.
A recent Commons report found that drivers are already paying an extra £80 on every policy to cover the cost of no-win, no-fee lawyers.
Ian Donaldson, Managing Director of Autonet said, “As much as insurers try to give customers the best deals possible, the truth of the matter is that while people continue to make fraudulent claims, then prices will continue to rise. It’s just a sad state of affairs that it is the compensation society we live in today encouraged further by no-win, no-fee lawyers.”
By Ben Malkin
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