Big players put the squeeze on car premiums

Average motor insurance premiums have increased by almost 25 per cent over the past six months, according to new research by insurancesupermarket.com, the price comparison website, increasing the average motorist's annual insurance bill by more than £100.

Average motor insurance premiums have increased by almost 25 per cent over the past six months, according to new research by insurancesupermarket.com, the price comparison website, increasing the average motorist's annual insurance bill by more than £100.

Although the cheapest premiums in the market have remained relatively flat - providing good value for those shopping around - apathetic consumers are being stung for much higher premiums, as many insurers try to recoup lost profits from the past few years of intense market competition.

Richard Mason, director of insurancesupermarket.com, says that while some insurers continue to keep their prices low, an increasing number of them can no longer afford to do business at the price levels of the past.

"This research shows that premiums are not only continuing to rise but are rising at a faster rate," he said. "After a spate of new entrants to the market 18 months ago, competition was forcing prices down. But now we are seeing an upward trend, probably due to a number of factors, including the increasing cost of uninsured drivers, and increased consolidation, meaning only a few big players dominate.

"Insurance regulation will, no doubt, also have a knock-on effect on the cost of premiums, as insurers try to cover the cost of administration. However, consumers should still continue to seek out the best deals, as insurers with the most competitive quotes will strive to absorb these costs."

Meanwhile, the Association of British Insurers announced the launch of a database to help expose fraudulent motor insurance claims this week - in a bid to help insurers keep their costs down. It is estimated that the new system will save insurers about £20,000 a day in detecting and deterring fraudulent claims.

Justin Jacobs, the head of motor and risk pricing at the ABI, said: "Dishonest motor insurance claims are paid for by honest customers - this is why insurers are determined to stamp them out.

"The development of this new database shows the industry's commitment to sharing information, with the common aim of reducing insurance fraud. Not only will it help detect more motor insurance fraud, but it will act as a strong deterrent, making anyone thinking of cheating on their insurance think twice."

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