AA Insurance Predicts Hard Year For Car Insurance Companies
Published: 30/09/08
Looking at the state of the market AA Insurance is expecting car insurance companies to have a break even year at best in 2009. They believe rising inflation and a more competitive marketplace will lead some companies to suffer losses.
At the moment the cost of damage to vehicles and property is rising by around 5 percent each year. Personal injury claims are also going up by around 10 percent a year and these costs mean that insurers are having to pay out more on claims. AA Insurance expect the cost of claims to be about 12 percent higher than the rate of inflation, making them more expensive in real terms.
An AA Insurance spokesman went on to say that, for car insurance companies to make a profit in the next couple of years they would have to increase premiums by over 20 percent. This would give them a margin of profit in year two that would then counter the loss made this year.