19/07/2010
By Graham Buck
Fraudulent claims have contributed to a record jump in the cost of motor insurance, according to the AA British Insurance Premium Index.
It shows that in the second quarter of 2010, the typical cost of an annual comprehensive car policy rose 11.5% on the first quarter to £704. The increase was the biggest recorded by the index since its inception 16 years ago and exceeded the previous biggest quarterly jump recorded only six months earlier.
Comprehensive policies sold via price comparison websites showed an even sharper rise of 12.7% from the first quarter, while the index showed respective rises for third party, fire and theft (TPFT) of 15.9% and 17.1% for those sold on price comparison sites.
The rising cost of bogus or inflated personal injury claims also contributed to the increase.
“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,” commented AA president Edmund King.
“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.”
The AA data contrasts with recent Home Office figures showing overall vehicle crime recorded by police in England and Wales down by 16% in the year 2009-10.
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