Home insurance and car insurance premiums are still rising according to the latest AA study. Home insurance rose nearly 8 percent and car insurance about 6 percent in the last quarter.
Weather disturbances and climate changes are to blame for the higher home insurance premiums. Natural disasters that damage homes have become a concern of many insurers resulting to the increase of home insurance premiums. Director of AA Insurance, Simon Douglas, explained that “Flood claims are both increasing in number and unpredictability. In just the past quarter we have seen severe weather in Cornwall, Hampshire, Sussex, the Isle of Wight and elsewhere, in places where there is no flooding history.” The early winter also brought increased of snow and ice related claims, including burst pipe claims which are being paid out £7m per day.
Douglas blames insurer losses as far back as 2009 for the increased car premiums. He said in a statement that, “There has been no let-up in premium increases as insurers struggle against losses from 2009, when for every £100 taken in premiums, £123 was being paid out in claims.
The large amount of payouts resulted in the largest annual premium increases experienced since the 1994 inception of the AA index. The House of Commons Transport Committee began a query into the insurance market because of the suddenly sharp rise in premiums.
Young drivers aging from 17-22 years saw the largest increase of car insurance premiums. They are paying 60 percent more, averaging to £2,251. The Association of British Insurers reportedly has detected 108 fraud motor insurance claims amounting to £1.12million everyday.
Mr. Douglas pointed out that some insurers already exited the car insurance market because of this loss. Others became extremely choosy, especially with young drivers.