Motor insurance premiums likely to rise despite recent drop

Posted :29-06-2006

Though the average price of motor insurance premiums has dropped by 1.74 per cent over the last year, this trend is unlikely to continue, according to analysts.

The average price of car insurance premiums actually dropped 1.94 per cent in March, but then rose 0.2 per cent over the next two months of April and May, research from Consumer Intelligence showed.

Analysts say that premiums are likely to rise however, over the next year.

The motor insurance injury will make a loss this year, analysts EMB found, as they have paid out £113 in claims and expenses for every £100 they were paid in premiums, Reuters reported.

Insurers have done a great deal to control their expenses but, even allowing for further releases of reserves and investment income, the motor insurance market is heading for a loss," EMB's senior consultant Paul Moorshead told Reuters.

"The prospects for 2006 are for a continued deterioration in underwriting results, which means that premiums will have to rise," he added.

In contrast to this year, motor insurance premiums rose .74 per cent in 2005, according to the data collected by Consumer Intelligence.


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