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Shannon D.
Navarre, FL
By Nicky Burridge
CAR insurance premiums could soar by up to 20 per cent this year, experts have warned.
Firms blame the problem on the rising cost of fraud and personal injury claims.
Insurers pay out around pounds 105 in costs and claims for every pounds 100 they take in premiums.
Up to now, the industry have recouped the shortfall by investing the premiums in the stock market.
But, in the current volatile investment climate, this is no longer viable.
AA Insurance said the average cost of the most competitive comprehensive motor insurance rose by 8.7 per cent last year to pounds 486.45.
Spokesman Ian Crowder added: "Some commentators suggest a rise of 20 per cent over the next year. Certainly, a rise of that magnitude will be necessary if the industry is to achieve an underwriting profit."
Industry figures show that fraud costs increased by around 17 per cent last year.
But the biggest bill was for personal injury claims, which soared by 22 per cent.
Around 430,000 claims for whiplash were made last year, leading to a compensation bill of pounds 1.9billion.
(c) 2009 Daily Record; Glasgow (UK). Provided by ProQuest LLC. All rights Reserved.
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