Death by insurance: Premiums have risen for all cars, but especially for those wearing a GTi badge. James Ruppert reports

GTi, GSi, XR3i - these apparently innocent letters and digits, when written on the rear of a car, can take the breath away. But it is not the car's performance that has this effect: it is the size of the insurance premiums, and the people gulping for air are the owners.

Premiums have gone through the sunroof - and, according to Clive Longhurst of the Association of British Insurers (ABI), the future of the GTi is going to be an expensive one. Last summer's street theatre involving teenage delinquents and stolen GTis - 'joyriding' - made the insurance business rethink its position and readjust its premiums.

This coincided with a revamp of the insurance grouping system on which, according to Mr Longhurst, the ABI had been working for almost five years. The original nine groups date from the Fifties, and with 12,000 types of vehicles now having to be classified, that was not enough; so the number has been expanded to 20. Most cars have simply doubled their group, from, say, five to ten; but the hot hatches have mostly been bumped up an extra notch. Although it is difficult to generalise, premiums for performance cars have increased on average by 25 per cent.

Mr Longhurst justifies the higher hot-hatch premiums by pointing out that accidents are more common with this class of car, they are better equipped than the standard models and the spares are expensive. Most alarmingly, the addition of a GTi/XR/GSi badge makes a car up to 11 times more likely to disappear from your drive.

The new group system has yet to be fully implemented - the ABI recommended a three-month period either side of 1 July. Some brokers are still scouting around for quotes. But when it comes to dealing with individual insurers, how do the companies view your hot hatch?

At Eagle Star, a hot-hatch driver would need to be at least 30 years old if he was not already insured by the firm. A spokesman, Paul Lock, said there was a theft excess of pounds 100 and that theft claims would only be met if the car was kept in a locked garage with its burglar alarm on. To help customers, Eagle Star has negotiated discounts on burglar alarms and steering-wheel locks.

Sun Alliance's spokeswoman, Karen Ingram, thought it was early days to judge the effects of the new group system, saying that the company would be implementing it from this week as and when policies came up for renewal. She indicated that hot hatches were likely to go up a couple of groups beyond the recommended doubling: 'We have no duty to be competitive when insuring these cars.'

She emphasised that Sun Alliance's core business was with the over-50 age group, which includes few GTi owners, although cover (not competitively priced) through its Value Plus scheme would still be available.

Among brokers the view is that the insurance companies are all watching one another. Tracey Gibbon at Swinton Insurance feels that it will take time for the market to settle down: Noel Privet's estimate, on behalf of AA Autoquote, is about 18 months.

Norwich Union, the UK's biggest motor insurer, has seen theft-related claims rise from pounds 50m in 1990 to pounds 65m in 1991. From the beginning of last month, it has been offering new customers theft cover on high-risk cars only if a Vecta immobilising device is fitted. This requirement affects 45 different models, all performance versions of family cars.

Derek Plummer, Norwich Union's marketing manager, said: 'We were faced with a number of options, including imposing huge premium increases for these cars, or not offering theft cover at all.'

But how do the manufacturers of these top-selling hot hatches feel about the increased premiums, and what are they doing to help? Volkswagen, the company responsible for the whole GTi concept, is sanguine. Its spokesman, Paul Buckett, says that while sales are down across the whole range the GTi is not suffering noticeably more than other models. 'Our research has shown that GTi buyers come from higher income groups, so perhaps they can afford the bigger premiums.' Norwich Union's quote for a Golf GTi owned by a 25-year-old living in Romford was pounds 1,116 fully comprehensive - or pounds 713 if he lived in Taunton.

Vauxhall was offering free insurance for Astra GSi buyers, but the scheme ended on 31 August. However, the Vauxhall Insurance Plan enables you to get a quote in the showroom, for a new or used car. My insurance plan got an AA Autoquote of pounds 679 for an average 35-year-old living in Truro; if he moved to Kensington the cost would be pounds 1,143.

Earlier this year, Peugeot offered 205 GTi buyers a pounds 500 'cash back', the intention being that it be put towards insurance costs. Colin Lewis, a spokesman, was reluctant to pinpoint high premiums as the reason for lower sales of the model (1,272 in the first five months of this year compared with 2,664 in the same period for 1991) and thought it was simply indicative of the recession. Sun Alliance quoted pounds 494 for a 35-year-old in Salisbury with no-claims discount protection, or pounds 810 in Slough.

Ford has suffered more than most: its Sierra Cosworth model was effectively killed by the insurance companies, which asked for annual premiums of up to pounds 5,000 even for drivers with full no-claims bonuses, and its Escort Cosworth (see right) may not fare much better. Ford's spokesman, David Nash, admitted that the increased insurance premiums had 'savagely attacked the sales and second-hand value of the XR3i'. Its response was to produce two different versions of the XR3i, one with a 105bhp engine, the other with 130bhp. But to the insurance companies, an XR3i is an XR3i and they lumped both versions in the same expensive grouping. In response, Ford has introduced the Motor Quotes scheme, where it pays the administration costs and doesn't charge a commission.

But just how competitive its rates really are remains a mystery to me as Motor Quotes never rang me back. However, Eagle Star would charge pounds 981 for a 35-year-old living in London SE13, or pounds 606 for the same person living in Gloucester.

This week, I also got a quote from my own insurance broker, who raised my GTi premium by pounds 200. He suggested I could reduce the bill by buying a Mini. Sounds like a good idea.

(Photograph omitted)