Fraud pushes car insurance premiums up

Fraud is helping to push car insurance premiums up at their fastest-ever rate, according to the latest AA British Insurance Premium Index.

During the quarter ending 30 June 2010, premiums rocketed by more than 11 per cent– the biggest increase recorded by the study since it started 16 years ago.

Edmund King, AA president, says: “The latest British Crime Survey suggests that crime levels are falling, but crucially, it misses a new 21st-century wave of fraud such as providing false information and claiming for non-existent personal injuries which just isn’t being picked up.”

He points out that premiums on price comparison sites have been rising fastest. “It’s now much easier to get an insurance quote on-line, for example, comparison sites can enable dishonest individuals to manipulate information to get a lower premium. Insurers are increasingly charging higher prices to these people to cover the increased fraud risk.”

“This quarter’s record increase comes on top of previous record rises. For those shopping on comparison sites, average premiums have climbed by an eye-watering 32.8per cent – or £193 – in just nine months. Even those taking the cheapest prices have typically seen them rise by £98.”

“Last year, the cost of meeting claims exceeded premium income by 22 per cent and the spiralling increases we’re seeing show that insurers are trying to fill that chasm.”