Go compare with our comparison table

Car insurance premiums could rise 20% to improve profitability

15 July 2009 / by Rachael Stiles

Car insurance premiums will have to rise by at least 20 per cent in order for insurance providers to make a profit, according to the latest research from Defaqto.

The independent financial research company has calculated that the average increase in car insurance premiums in 2008 – around 8.7 per cent – was not enough to bring back any underwriting profitability for car insurance companies.

Defaqto explains in its report 'Motor Insurance 2009: Another Bumpy Ride', that in order to become more profitable, the car insurance market will have to charge customers an additional 20 per cent.

While rate increases have already been implemented, these are not enough to ensure profitability will return to the car insurance industry, Defaqto says.

Mike Powell, principal consultant for general insurance at Defaqto, commented: "Motor insurers are going to need to think carefully about choosing to write for profit or market share. They are not going to be able to do both. Even in the commercial motor market, where there has been consistent profitability for the past few years, profitability is on a knife edge."

© Fair Investment Company Ltd

 

ProviderSpecial OffersGet Quotes

5 Star Car Insurance from £196* - You could save up to 20% online.
10% of customers are expected to receive the maximum saving.

Get Quotes >
Save up to £917 on Car Insurance**.

Multicar discount - minimum premiums apply. Guaranteed Hire Car cover comes as standard with our comprehensive motor insurance. Underwritten by U K Insurance Ltd

Get Quotes >

97% of customers would buy again from LV= (verified by Reevoo)

Benefits include UK call centres, 24/7 claims helpline, unlimited cover for factory fitted phone, audio and sat nav equipment, and replacement child car seats. Plus optional extras, such as motor legal expenses, guaranteed courtesy car, European car insurance cover, increased personal accident cover and breakdown cover.

Get Quotes >

Don’t get caught out when you break down. Churchill offers free breakdown cover to new Motor customers
First year Breakdown service (roadside only), provided by Green Flag, new policies only. Excludes N.I . Breakdown chargeable at renewal. Underwritten by U K Insurance Limited. Terms & conditions apply

Get Quotes >

Save 15% Online††
No claims discount up to 75%.

Get Quotes >

Saga Car Insurance is designed for drivers aged 50 and over. Comprehensive cover is available from just £120 a year***.
With a Comprehensive policy you'll benefit from the following as standard: Uninsured driver cover, Vandalism cover, Up to £1,000 personal belongings cover, Cover for driving in the European Union for an unlimited period.

Get Quotes >
New customers can get 12 months' breakdown cover for the price of 6 when they buy AA Car Insurance. You also get access to member benefits, including up to 20% off at Moto service areas. Get Quotes >

Get Comprehensive Car Insurance Quotes Online.

Get Quotes >
Free Annual Roadside Assistance and Recovery Breakdown Cover worth £49.
Over 50s save at least £50.
Get Quotes >
5 Star car insurance from £222***
Uninsured driver promise. Courtesy car as long as your car is being repaired.
Get Quotes >
Confused.com compare prices from over 130 motor insurance providers to find you their best dealGet Quotes >
Save up to £230 on your car insurance (51% of consumers could achieve a saving of up to £229.96 with Gocompare.com car insurance based on a comparison of at least 40 companies)Get Quotes >