Drivers in Northern Ireland — where car insurance already costs more than the rest of the UK — should brace themselves for double digit increases.
The warning comes from the Automobile Association, which estimates a hike of between 10-12% on the average comprehensive premium in the next 12 months.
In Northern Ireland, the average price paid for comprehensive car insurance — or the ‘Shoparound’ premium — in January was around £490, according to the AA.
A hike of more than 10%, therefore, means that hundreds of motorists could see their annual policies rise by an extra £50 this year.
The bad news comes after the latest benchmark British Insurance Premium Index revealed a sharp upward jump over the last three months of 2008, of almost 1% per month.
The motoring organisation also said the average quote premium increase over 2007 was 5.9% compared to 8.7% over 2008.
But, speaking to the Belfast Telegraph, AA public relations manager Ian Crowder said that the cost of premiums has been falling in Northern Ireland in recent times.
“Prices are certainly not as expensive as they used to be, but they are still a little higher than in the rest of the UK, by about 5%,” he said.
“Some commentators have said that premiums should go up by 20% over the coming year (2008/2009) if insurers were to make an underwriting profit.
“They are facing low reserves, poor investment returns, increasing fraud claims, rapidly increasing personal injury claims and the associated legal costs to the Motor Insurers Bureau for the cost of meeting compensation claims because of accidents involving drivers who were not properly insured.
“But there are downward pressures too and we believe that premiums will continue to rise in the order of 10-12%, but certainly not 20%.”
Mr Crowder said that motorists here pay more for insurance for a number of reasons — notably the complaints level and the lack of providers.
“Northern Ireland has traditionally commanded higher premiums because there are more claims for the province than anywhere else in the UK,” he said.
“This is in large part due to the fact that there is little in the way of motorways, which are the safest places to drive — busy city streets and country roads tend to generate much more in the way of accidents. Also, fewer insurers quote in Northern Ireland than on the mainland.”
With motorists across the province continuing to pay more for petrol than anywhere else in the UK, the threat of car insurance tariffs rising further still will be most unwelcome.
Peter Staddon, head of technical services at the British Insurance Brokers Association (BIBA), said it was “disappointing” that consumers in Northern Ireland “are paying so much more” for their insurance.
But he added: “It is, however, very important that consumers do not purchase their insurance protection by comparing the price of policies alone. All policies are different and provide different levels of protection.
“Purchasing a cheaper policy can be a false economy, which could leave consumers without adequate protection.
“I suggest that in addition to price, consumers also consider the levels of cover, excess and the policy exclusions.”