UK Car Insurance Increases Predicted To Continue

These days, low car finance costs seem to be the only good thing about owning an automobile. Fuel and repairs are more expensive and car owners will soon feel an additional pinch for their auto insurance.

In 2010, car insurance companies experienced huge losses. They are now trying to recoup this money and are using car owners as their source of income.

Auditing and accounting firm Deloitte analyzed the British auto insurance market. In 2010, premiums increased by approximately 10 percent. However, this did not seem to help, as insurance firms still lost over £2 billion.

Claims were unexpectedly high last year. No-win-no-fee claims regarding personal injury were mainly to blame.

The insurance industry is now trying to recover its losses, imposing higher premiums on vehicle owners. The AA predicts that premiums might increase by as much as 30 percent.

Between this and the rising cost of fueling a car, some people may find vehicle ownership unaffordable, even if they do have low-rate car loans. Those who have low claims records can rest a bit easier because their premiums are usually lower.

According to Deloitte, for every 100p earned in premiums in 2010, insurance companies paid out 120p, costs included. To remain operational, some of them were forced to tap into their reserves rather substantially.

They could not continue to do this and needed to come up with another way to get the money. Car owners seemed the most logical party to provide assistance.

We can only predict what the overall effect on our auto insurance premiums will be. What we do know is that it is not likely to be positive, based on the Deloitte report.

Thank goodness for cheap car finance deals because otherwise, we may already be turning in our vehicles and taking public transportation to work.