Due to the recent rise in the value and number of personal injury claims to insurance companies, the country has fallen prey to skyrocketing insurance premiums over the last couple of years.
This comes despite the steadily declining rate of car crashes on an annual basis. Industry experts point at unnecessary and fraudulent practices on the part of some customers, which lead to higher premiums to the detriment of the general citizens.
This month, calls for a solitary enforcement unit to eliminate fraudulent insurance practices were finally answered with the introduction of police insurance fraud body. This comes as another step in the series of measures employed by the Government to stem the flow of insurance fraud that seems to have enveloped the nation. Last year, the Government introduced the Continuous Insurance Enforcement unit. It also gave increased authority to insurers by granting them access to DVLA data. All these measures have been taken to curb insurance fraud and allow the availability of lower premiums to applicants.
From July till December, 2011, customers suffered hefty premium raises and blamed insurance providers for what they thought was usury. However, the insurance companies had little other choice, since they had to bridge the gulf between cost of personal claims and the income generated from premiums. However, as things stand at present, the insurance providers are still reeling under the loss from fraudulent claims. Industry experts foresee another premium price rise in the middle of this year, although not as severe a hike as the one before.
However, the real humdinger is the news about the end of the gender based exemption enjoyed in the European insurance industry. Last year, Europe’s Court of Justice ruled that insurance providers cannot use gender as a tool for rating premiums. The ruling will come into effect on December, 2012.
The most likely affected from this development will be young women, who until now, have enjoyed rate of premiums up to 40% lesser than their male counterparts. With the new ruling into effect, women’s premiums will start taking a slow rise in the months towards December, and see a further increase of another 25 percent afterwards.
However, with the development of the ‘black box’ insurance, there’s still hope for drivers. The telematic system, which gauges driving quality including measuring speed, braking and cornering, will pass the collected data real time to the insurer. The insurance company will then award low premiums to safe drivers, regardless of gender. This system, complemented with no-claims bonuses, could go a long way in reducing premium prices for UK drivers.
Aggressive drivers who are characterised by edgy cornering, disregard for speed limits and heavy braking will have to pay the price in the form of high-cost premiums. Basically, the black box insurance system has a two-fold purpose: to reduce premiums by awarding low-risk drivers and to promote the practice of safe driving by punishing offenders with higher premiums.
With such systems in place, it seems likely that people who compare car insurance quotes and engage in safe driving will come off for the better.