It looks like 2017 could be a rollercoaster year for motor insurance premiums. We began the year with news from the ABI that premiums had reached their highest recorded level. The insurance body said the increase was caused by the combined effect of a rise in repair costs, increases in Insurance Premium Tax, and a continued rise in whiplash-style claims.
It meant that the cost of motor insurance rose by more than five times the rate of inflation in 2016, with the average premium costing £462 by the end of the year.
Good news appeared to follow as the government announced their Prisons and Courts Bill, which contains details of reforms for small claims including for whiplash injuries. The bill was welcomed by the ABI, and there were estimates that the changes would cut motor insurance premiums by about £40 a year.
However the recently announced changes to the Ogden rate could wipe out any benefits brought by the Prisons and Courts Bill reforms, and will increase premiums by an average of £75. On top of this, Insurance Premium Tax is due to increase from 10 to 12 per cent in June.
Whatever else happens this year, it looks like it could be a bumpy ride. Although at least users of RDT’s policy administration system, Landscape, have the ability to easily update their rating to reflect all these changes.