Page last updated at 23:02 GMT, Wednesday, 29 July 2009 00:02 UK

Car insurance premiums 'rising'

Motorway jam
The AA says that rising costs are putting up premiums

Car insurance premiums are rising at a faster rate than at any time since the start of the decade, a survey has said.

Fraud and bigger personal injury claims, such as whiplash, have pushed up the costs to insurers and in turn to motorists, according to AA Insurance.

The average annual comprehensive car insurance policy between April and June rose to £778, a rise of 3.5% compared with the previous three months.

This pushed the year-on-year increase to 11.3% in June.

Younger drivers

The rise in prices also hit those buying third party, fire and theft policies - typically young and inexperienced drivers.

The average third party policy rose by 4.6% in April to July compared with the previous three months, to £968.

"Underlying premiums are rising more steeply than they have since 2000 because of rising costs," said AA Insurance director Simon Douglas.

"I do not see pressure on premiums easing. Last year I predicted that we would see premium increases of 10% or more and current evidence supports this."

The group said that the industry needed to turn around underwriting losses, as well as pay the costs of detected fraud and uninsured drivers who have accidents.



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