Why Do Car Insurance Premiums Continue To Rise?

For the past four years in the UK, annual car insurance premiums have risen by 90%, now bringing the average annual premium to £840. Insurance companies are always quick to point the finger towards Personal Injury law firms, blaming them for encouraging people to come forward with injuries such as whiplash. Yet despite popular belief, whiplash claims actually fell by almost 24,000 last year.

The insurance companies like to portray themselves as a ‘reliable friend’, someone we can trust and rely upon. Their TV advertisements use nodding dogs and comedians to tell us about the best deals, proving that they’re ‘looking out for us’.  However, in a Channel 4 Dispatches programme named ‘Secrets of your Car Insurance’ aired on 7th January 2013, the truth was revealed about the insurance industry and the tactics they use to increase their profits whilst keeping premiums at an all-time high.

Car body shops in the UK often rely upon contracts from insurance companies to survive. Although once body shops have such contracts, insurance companies then dictate to them repair methods and products that are to be used in the repair process. The focus for insurance companies always seems to be the price of the repair opposed to its quality. Insurers will ask garages and body shops to use non-genuine parts in order to decrease costs. Yet, these non-genuine parts don’t quite live up to the genuine branded parts and in some instances can pose as a potential safety hazard. In one example on the programme, a body shop employee had been ordered by insurers to leave a part off needed in the middle of a door due to its expense. The body shop employee informed Dispatches that this part of the door was essential to ensure that the door didn’t crumple upon impact. The garage fitted this part to the door anyway, despite the insurer arguing that it was unnecessary, and eventually they agreed to pay for it as part of the car’s repair.

Not only do insurers look to cutting costs for car repairs if the accident was your fault, but if you are not to blame they purposely try to make the repair as expensive as possible. This is because a rival insurance company will have to foot the bill. Garages are told to charge different labour rates for ‘at fault’ and ‘not at fault’ claims. Evidence compiled by Dispatches found that one insurer instructed garages to charge £21 for at fault claims, opposed to £40 for not at fault claims. This is for exactly the same work done by exactly the same people, the only difference been that the insurers know a rival company will be paying the cost.  With insurers using these tactics, it is only further bad news for consumers as the cost of car repairs become even more inflated.

Another interesting finding about insurance companies highlighted in the Dispatches programme, was that each year many insurers get massive rebates from external companies. For example, an insurer may strike a deal with a paint manufacturer to ensure that a particular brand was used on every body work repair. Due to these big contracts, the paint company would then give that insurer a huge rebate. In fact it has been estimated that because of such deals, insurance companies in the UK make £225million a year. Surely, this should mean that discounts are passed onto consumers and we will get a deduction in our annual premiums?  It appears that the answer is no. In fact, it is likely that annual insurance premiums will only continue to rise year-on-year leaving the insurers pockets full whilst the consumers are rapidly beginning to empty.

If you have been involved in a Road Traffic Accident and would like free legal advice from a qualified solicitor please feel free to contact us on 0800 158 5274

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