How the world around you affects your premium
As a broker, we work with some of the top insurance companies in the UK to find the very best products and services for our customers. When choosing the right policy, price is an important consideration and over recent times we've seen a number of factors that have affected insurance premiums. Below is a summary of these main factors. We hope you find the information useful.
Insurance Premium Tax
Insurance Premium Tax (IPT) is a tax affecting all motor, home, travel and health insurance policies. Since November 2015, the Government has increased IPT from 6% to 10%, and in June 2017, this tax will increase by a further 2% to 12%. As a result, the ABI now confirms* that the UK has the sixth highest rate of IPT in Europe (previously we were eighth).
Increase in claims and the Ogden Rate
As well as a rise in personal injury claims, which have risen by 50% over the last decade**, the Lord Chancellor recently announced that from 20 March 2017, there's going to be a big change to the amount of compensation that insurers have to pay out following successful personal injury or fatal accident claims. Called the "Ogden Rate", which is reducing from 2.5% to minus 0.75% for all insurers, this means that compensation rates are expected to rise and as a result, there's likely to be a substantial increase in premiums.
We all know how extreme weather can affect the UK. Prolonged periods of cold weather or rain can increase the amount and severity of claims. Ice and wet weather can lead to more accidents as people don't always change their driving behaviour for the conditions. If the number of claims increases, for example due to extreme weather events, this might increase costs which can lead to higher prices.
Parts and repair costs have gone up
It's getting more expensive to buy car parts and pay for repairs, which increases the cost of providing insurance and the price you pay.
What to do next
If you'd like to discuss any of the points in more detail, please contact us (you can find the details here). We're here to support you, understand your requirements and make sure your policy meets your needs. And best of all, we won't charge you a penny to check your level of cover.
*Source - ABI News Release, 25 November 2016.
**Source - UK government press release.