Car insurance premiums are set to rise by nearly 30 per cent by the start of 2018.
A number of factors including tax increases and higher repair bills will combine to further hit the pockets of drivers, according to analysis by ERS, the UK’s largest specialist motor insurer.
ERS expects the average premium for a standard car driver to rise by £60 to £360, while a taxi driver, carrying multiple passengers throughout the day, could see their insurance premium increase by £720 a year to over £3,000.
This equates to a 20 per cent increase for a standard driver and a 29 per cent rise for a commercial driver.
A key factor influencing premiums is the cut to the ‘Discount Rate’ – an adjustment that is applied to lump sum compensation payments for people who suffer life-changing injuries.
In March this year the Ministry of Justice slashed the rate from 2.5 per cent to -0.75 per cent, catching the industry by surprise and costing it hundreds of millions of pounds.
ERS’s analysis shows the change will make premiums £21 higher for the average driver and £330 higher for a taxi driver.
Ian Parker, chief executive of ERS, said: “This is a pivotal year for motor insurance, with a range of factors converging which will translate to higher premiums for every motorist.
“We estimate the combined impact of factors including Ogden, Vnuk, claims inflation and reinsurance to premiums will lead to price increases of up to 29 per cent, costing drivers hundreds of pounds.
“That increase is a bitter pill to swallow for many people who expect that the cost of their annual motor policy, without a claim, should decrease.”
Other looming shocks for drivers include a further hike in Insurance Premium Tax, which the Chancellor announced in March would increase from 10 per cent to 12 per cent on June 1, 2017.
‘AVOID WEBSITES AND USE A BROKER’
Drivers wanting to combat rising insurance premiums should seek the knowledge and expertise of brokers and not just used comparison websites.
That’s according to Ian Parker, chief executive of specialist motor insurers ERS.
He said: “Finding the cheapest price online is not necessarily the way to get the best deal.
“Anyone with a slightly different vehicle or driving background often doesn’t get the right insurance.
“It doesn’t cost anything to use a broker and they can give you a comparison that is more tailored and better value for money.”