Car insurance insiders are predicting a hike in premiums in 2016. This is why we’ll be paying more – and how you can find yourself something cheaper
Motorists face an inflation-busting 8% surge in the cost of insurance next year, a report warns.
Accountants EY predict a combination of higher taxes and the cost of claims will drive up premiums in 2016.
The average 8% increase would equate to an extra £30 on the cost of a typical annual policy.
Tony Sault, UK market leader for general insurance at EY “This is the biggest rise in premiums since 2011.
“Insurers are a long way from achieving a repeat of 2013, when the industry turned a profit for the first time in 20 years, so a further hike in premiums comes as no surprise.”
EY believes jacking-up prices will rake in an extra £900million for insurers.
But it also warns that insurers, on the whole, are losing money on the average policy – paying out more in claims than they get from premiums.
They are still able to post profits by drawing on reserves from previous years.
One reason drivers will pay more is a Government-imposed increase in an Insurance Premium Tax, which rose from 6% to 9.5% on November 1.
Insurers have also seen higher claims for whiplash, while cheaper fuel more people are driving, and having accidents.
Kasey Cassells, insurance expert at uSwitch.com, says: “This predicted hike in premiums is another blow to drivers who have already been hit by a rise in insurance premium tax this year.”
Drivers must pay £30 more car insurance next year in "biggest hike for 5 years" - how to get a better deal
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