If you’ve just received a renewal quote from your motor insurance provider, perhaps you are wondering what crime you committed in a former life to warrant such an exorbitant figure.
Of course, your first port of call should be Confused.com, to compare motor insurance and save money, but you may well wonder why the cost of running a car seems to be going through the sun-roof.
As well as inflation and the cost of car parts driving up your quote, there are various other issues within the car insurance industry that are hitting the pockets of even the most careful and experienced drivers.
Rising claims costs
Claims inflation has shot up in recent years. In fact, the cost of the average claim has increased from £1,317 in 2003 to £2,182 in 2008. Medical inflation is the main driver of this increase, especially in the case of bodily injury claims according to the UK Private Motor Insurance Survey 2010. Accident management companies are also having an affect in medical claims inflation, further driving up the cost of an average claim.
Claims are also taking longer to settle than ever before, which further adds to the costs. Things like solicitor's fees and claim administration fees all have to be taken into account.
Fraud
In addition to rising cost of legitimate claims, another concern for the motor insurance market is insurance fraud. The majority of fraud cases in the car insurance market relate to small value, opportunistic claims but there are also a number of high-value premeditated cases. Fronting is also an issue for the industry and something that is also considered fraud.
Undetected fraud is estimated to increase the cost of an average annual individual policy by around £44 this year.
Read more about rising car insurance costs here.
