Could lower premiums be on the horizon?


A recent investigation into how the car insurance premiums of UK customers are used by insurers found that many drivers are left shocked when they find that the cost of their insurance policy has risen at renewal, despite never having made a claim.

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The investigation also revealed that 20% of the income received by insurers is spent paying out for whiplash claims. Whiplash ranked second in the list of insurer expenditures, just behind repair costs and replacement vehicles, which uses 29% of premium income.

The report has been released following the announcement of a new inquiry by The Transport Select Committee (TSC) into how to reduce the costs associated with whiplash claims, after it was found that these claims add an estimated £90 to all motor insurance premiums in the UK. The TSC inquiry follows a separate investigation by the Ministry of Justice, and new legislation introduced on April 1st, designed to prevent lawyers from playing the system in favour of whiplash claimant.

It has also been stated by the Association of British Insurers that despite the fact that the number of road accidents has decreased by around 23% between 2005 and 2010, whiplash claims have increased by 70% with an average of 1,500 claims per day, costing around £2 billion annually.

Helping drivers

The announcement comes at a time when a large proportion of people in the UK have been cutting down on their car usage, as they can’t afford the cost of keeping their vehicle on the road, with many only been using their cars for essential trips.

However, with this new investigation into whiplash claims and new legislation in place, many are hopeful that it will drive down the cost of high motor insurance premiums, which in turn could benefit millions of people across the UK, and in particular young drivers.

The issue of young drivers hit the headlines recently when the government announced it was looking to put a curfew on drivers under the age of 24. This is to help reduce road accidents, as one fifth of serious car accidents involve drivers between 17 and 24. It was also suggested in part to help reduce the cost of car insurance for young drivers, with the average insurance premium for a 17 to 18 year old currently standing at £1,800.

The results of the TSC investigation into whiplash claims are expected to be published in the summer.