Costs will rise 28% for insurers
Last updated 17:17, Monday, 19 May 2008
MOTOR insurers’ claims costs will soar by 28 per cent over the next five years, according to a report by Datamonitor.
The market analyst said the amount insurers pay out in claims could jump from £8.5 billion in 2007 to £10.9 billion by 2012.
This is despite a fall in the number of road accidents from 222,000 to 189,000, between 2002 and 2006.
The report says the rise in pay outs has been mainly caused by increases in medical and legal costs – the average payout to somebody injured in an accident rose from £4,277 to £5,331.
A spokesman for the Association of British Insurers said: “Insurance companies are looking at ways to keep claims costs under control and premiums under control.”
Mahreen Hussein, who wrote the Datamonitor report, said: “Personal injury claims continue to constitute the largest bill for motor insurers.
“Strong rates of inflation relating to medical costs and legal costs are the primary reason behind escalating bodily injury costs which have grown significantly.”
Both garage repair bills and the cost of replacement parts have also increased.
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