One of the UK's largest insurance groups, Norwich Union (NU), is reportedly set to raise its rates on car insurance by up to 40 per cent.
The average premium will rise by 16 per cent when customers of the insurance giant come to renew their policies, NU said, although high-risk demographics are likely to feel the pinch more than others.
Young male drivers are traditionally the highest risk and could see premiums jump by over a third. Some predictions suggested NU's decision could be a blueprint for the rest of the market and cause widespread rises.
Patrick Snowball, the head of Norwich Union parent company Aviva UK, said he hoped the move would bring to an end the industry price war that has been slashing profits.
"We are determined to lead the market on this and we would expect some sensible discipline in the market," Mr Snowball told the Independent.
"The pendulum has swung too far and rates have been too low – we have to act to ensure our business is profitable."
However, many analysts have immediately dismissed this course of action, saying competitors, particularly online insurers like esure.com and Swiftcover, would be unlikely to raise their premiums in line with NU because they were currently doing excellent business.To read more about insurance, click here.
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