Rise in claims by victims of uninsured drivers could push up premiums

Rise in claims by victims of uninsured drivers could push up premiums
Rise in claims by victims of uninsured drivers could push up premiums

The number of compensation claims made following accidents involving uninsured drivers has increased for the first time in a decade.

There has been a 10 per cent increase in claims over the last year, according to data from the Motor Insurance Bureau – the body responsible for compensating victims.

Between 2004 and 2015 the number of annual claims fell consistently from 25,000 to around 11,000 but last year it began to rise again.

Ashton West, chief executive at the MIB said: “The numbers of claims handled by MIB each year highlights the devastating impact of uninsured driving on communities and families up and down the country.

“In the last year or so, for the first time in a decade or more, we are starting to see the trend of reduction actually change direction, and we have started to see it increase.

“Ultimately our message is the same as always – if you are driving without insurance you will get caught.”

Rising costs

The compensation paid by the MIB is funded through an annual levy on insurers, paid for through insurance premiums. For 2017 the levy will be £256 million, up from £250 in 2016, pushing up premiums for everyone.

“We are concerned spiralling premiums might encourage some drivers to risk driving without insurance”

Mark Godfrey, RAC

The MIB has launched a study to examine the cause and impact of the increase but some observers have suggested the rising costs of car insurance could be tempting drivers to avoid taking it out.

In the last two years insurance premium tax has doubled from six per cent to 12 per cent. At the same time, the way compensation for the most serious injuries is calculated has changed. This has pushed up the cost to insurers, which they have passed on to customers.

In the last year the average premium across the UK has risen by £90 to £666. For drivers under the age of 24 it’s nearly twice that, at £1,202.

Stealth tax

RAC insurance director Mark Godfrey said: “Although the facts need to confirmed, there is a clear suggestion here that we might be seeing an increase in uninsured drivers on our roads – which, if true, would be a cause of concern.

“If it does turn out to be true there a number of potential factors at play. Drivers have faced three increases in insurance premium tax in two years – making it, in the RAC’s view, a genuine stealth tax on motorists. Those who pay the largest premiums – most often younger drivers and those with less experience – pay more in tax.

“We are concerned spiralling premiums might encourage some drivers to risk driving without insurance, which in turn has the potential to increase premiums still further for everyone.

“Uninsured drivers represent a risk to everybody and we urge the Government to take these findings seriously and provide reassurance to motorists that they will act if needed.”

 

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