The price of motor insurance is growing at its fastest rate, in large part because of a improvement in fraudulent claims, in accordance with data released today.
During the three months towards end of June, vehicle insurance premiums increased by 11.5% to 704 with an average annual comprehensive car policy, in line with the AA British Insurance Premium Index. It is the biggest increase recorded via the motoring organisation given it started tracking quarterly insurance premium trends 16 a long time ago.
This charges are the normal from the cheapest three premiums quoted for all those shopping around at renewal time, a step the AA uses which is more detailed what a lot of people purchase their insurance. The average premium has risen more within the past quarter, by 12% to almost 1,000. This is certainly up from under 800 recently and 337 in 1994 if the index started.
Young drivers now fare particularly badly. Premiums for any such, fire and theft cover, often bought by young drivers, climbed by 15.9% from the with three months into the end of June bringing the standard for this get older to 1,224.99. Vacation, fire and theft cover is currently more pricey for many drivers, not just younger ones, than comprehensive cover a result of higher incidence of claims with this sort of insurance.
“The latest British Crime Survey, published yesterday, implies that crime levels are falling, but crucially, it misses a whole new 21st-century wave of fraud such as providing false information and claiming for non-existent injuries, which is not really being purchased,” said Edmund King, AA president.
Cases of insurance fraud have been getting the growth considering that the recession began. Figures for being provided by the Association of British Insurers (ABI) in a few days need to show why these will always be going up. As it is, the ABI puts the total cost into the industry of undetected general insurance claims fraud at 2bn per annum. This adds around 40 1 year to the insurance fees paid by all policyholders.
The most popular and expensive style of general insurance claims fraud is “opportunistic retail fraud”. That’s where individuals exaggerate or inflate genuine statements to improve the price of a payout.
But there has also been a major improvement in organised fraud, where criminal gangs work to systematically defraud insurers. The most popular method of doing this is via a “cash for crash” scam, where criminals stage accidents, typically at roundabouts, by slamming their brakes on suddenly creating the car behind to crash into them. The fraudsters then claim for the value of repair or replacement of their vehicle for the innocent driver’s insurance. At a high lawsuit in February, an organised ring of “cash for crash” insurance fraudsters was ordered to repay its victims almost 400,000 after seven insurers gathered and properly sued the fraud ring.
The rising price of repairing cars has additionally included with the rise in premiums as insurers find it hard to cancel out the huge underwriting losses and may making in the last number of years. Estimates report that for each and every 1 taken in premiums, 1.22 will be released in claims.