Car Insurance: Here’s Five Reasons Why Yours Will Cost More In 2020
Sorry to be the bearer of bad news, but you’re almost certainly going to spend more on car insurance in 2020. Why? A ‘perfect storm’ of factors…
A Perfect Storm
Motorists are being warned that the cost of car insurance is set to rise throughout 2020. GoCompare Car Insurance believes that a ‘perfect storm of factors’ will entail costlier premiums.
Lee Griffin, CEO of GoCompare, said “we’re expecting this year to be another challenging one for car insurers with a perfect storm of factors coming together to put further pressure on premiums. In addition to rising claims costs, economic and political uncertainty, insurers may face regulatory measures to change their pricing practices as the Financial Conduct Authority publishes its report and remedies on making the car insurance market work better for customers”.
Griffin has advised motorists to use their initiative. He said, “rather than just sitting back and accepting a bigger bill for their car insurance, motorists should shop around to find cover at a good price, that suits their needs.”
These are the five factors in 2020’s insurance ‘storm’…
1) Cases Of Fraud
Car insurance fraud continues to plague the industry. Despite advanced and elaborate detection systems, policyholders continue to make false, or at least exaggerated, claims. Many also provide false details. There’s also a rising ‘crash for cash’ tendency. This sees drivers deliberately staging accidents in order to make a claim. All of this places a strain on the industry and it’s law-abiding drivers who pick up the bill.
2) Brexit Woes
There are few issues as divisive as Brexit. Either way, it happened and the country is no longer a part of the European Union. Negotiations are ongoing but, in the meantime, the value of the Pound has declined. As a result, it’s more expensive to import car parts and components; that means increased costs.
3) Rising Repair Costs
In addition to economic uncertainty, car insurance companies are getting used to the realities of increasingly technical vehicles. Our cars now come with elaborate electronic features and costly infotainment systems. These are time-consuming and costly to repair. So whilst you may enjoy in-car technology, you have to accept that it represents more of a liability for a provider. For a bit of perspective, insurance providers fork out £12 million a day on car repairs.
4) Theft Pandemic
The number of car thefts is increasing and has been described as a ‘pandemic’. In fact, the number rose by 7% between the summers of 2018 and 2019. Keyless car thefts in particular have begun taking their toll, too; seeing some of the most expensive models on the road being targeted. The average claim for a stolen vehicle is now £8,000, up from £3,500 in 2013 when records were first made. That’s just another rising expense for providers.
5) The Ogden Discount Rate
The so-called ‘Ogden Discount Rate’ is the mechanism used to determine how much insurers should pay in compensation to people who suffer injuries. It’s paid in a lump sum, so the amount is discounted in order to account for interest payments. Government changes can increase the overall cost for insurance providers; who then pass the cost on to their customers. If it doesn’t sound fair, it’s probably because it isn’t.
Whilst it’s easy to lose our rag with car insurance companies, it’s easy to see how their own expenses are increasing; in some cases, quite dramatically so. Some of this is a product of government policy. But other causes lie with the automotive industry and consumer preference. Our cars are more technical than ever; but it’s drivers who shape and define these features through their spending habits. If you want cheaper car insurance, choose an economical car, drive responsibly and, like Griffin says, shop around.
New Car Tech Is Putting Up The Price Of Insurance – https://autoserve.co.uk/motoring-news/new-car-tech-is-putting-up-the-price-of-insurance/
Comparison Sites Are Adding £60 To Car Insurance Quotes – https://www.autoserveclub.co.uk/blog/comparison-sites-are-adding-60-to-car-insurance-quotes/