Motoring insurance is on the rise again. Not simply because insurance companies have decided that they need to try and make a profit from selling car insurance, but the government is also having a hand in it.
The Chancellors rousing speech in his Summer budget following the Conservative’s electoral victory brought about a few changes that would affect huge swathes of the UK. One of them was the not-so-glamorous, anticipated rise in insurance premium tax (IPT). Well it might get your attention if you knew what it meant for your pocket.
Fundamentally, it is a tax put on insurance companies in the interests of raising money for the Government. The standard rate of this tax is set to increase from 6 per cent to 9.5 per cent from November and inevitably, the additional tax demands will be added to consumer insurance premium costs.
Bad news for homeowners and motorists, you’d think. Well comparison site moneysupermarket has done some digging and they reckon that a two car average household could expect to pay around £35 extra a year for home and car insurance.
Although the AA’s claimed that the extra £10 to £20 per year would “lead to an increase in uninsured drivers”, we’re not so convinced. What is clear is that motorists will once again be shopping around, finding the most cost effective insurance policy for them.
Still need further convincing about shopping around for insurance? Our friends at the AA have been tracking the cost of insurance premiums for many, many years and have recently said that we have all seen an increase on our premiums in the past three months. It’s the first time a rise has been seen in almost three years, and it doesn’t look good for he rest of the year.
It showed that the cost of annual comprehensive car insurance rose by 5.2% in the three months to the end of June 2015. Drivers aged 23 to 29 have seen a 6.2% rise over the same period, the biggest increase of any age group.
Janet Connor, managing director of AA Insurance, said:
“Insurers have been releasing their reserves to maintain their competitive edge to the point where this is no longer sustainable – and we are seeing premiums beginning to rise once more,”
“The days of cheap car insurance premiums are over – price rises are inevitable.”