More Insurance Hikes 'Inevitable'

The AA said its British Insurance Premium Index registered its first significant rise for three years in the three months to June, with average annual comprehensive cover rising 5.2% to £549.46.

It blamed a lack of profitability among insurers for the rises, saying many providers had previously relied on repeat business over several years to achieve a profit as competition grew, forcing prices lower.

Premiums had been largely falling since 2011 as efforts to tackle bogus claims intensified but the AA report suggested further increases were now "inevitable".

It cited a rise in the Insurance Premium Tax announced in the Budget earlier this month, which the AA said was expected to add £18 to the cost of a typical comprehensive policy.

The report said that young drivers faced the biggest rises to premiums between April and June, with those in their twenties enduring an average annual increase of more than 6% to £682.62.

Drivers in the Border and Tyne-Tees and West Country areas saw the biggest jumps in their car insurance premiums while the northwest of England was the most expensive area to obtain a car insurance quote, at almost £800.

Scotland remained the cheapest, with the average quote at just over £380.


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