Staveley Head

Staveley Head

February 18, 2010 01:00 ET

Staveley Head: Ambulance Chasers Responsible For Increase In Van Insurance Premiums

FLINT, UNITED KINGDOM--(Marketwire - Feb. 18, 2010) - Car and van insurance premiums are set to increase dramatically in 2010, according to industry experts, even though premiums rose by an average of 20% last year. The blame for these increases is being placed upon the ever increasing cost of personal injury claims and the resulting legal costs of the lawyers who advertise extensively on television and in the national press.

Experts are predicting a 15% increase this year, to follow the 20% increase incurred between January 2009 and January 2010 as recently reported by market researchers Consumer Intelligence.

The price comparison websites have been accused of keeping premiums artificially low during the very soft market which has existed over the last two years or more, but even they are now beginning to feel the impact of insurance companies' reaction to continued underwriting losses.

Staveley Head, one of the UK's leading commercial vehicle insurance providers, believes this is the inevitable result of insurers' determination to hold on to their market share at all costs. A spokesman said:

"Many insurance companies have been underwriting road risks cover at a loss for a number of years, and hoping that their investment returns would compensate for the deficit. Unfortunately, since the recession hit, investment returns have been negligible and many insurers have had to draw on reserves in order to pay a dividend to shareholders. These reserves are now running dangerously low in some instances, and those insurers might be concerned about complying with the solvency requirements imposed by the Financial Services Authority. They have no alternative other than to increase premiums to a more realistic level."

It is estimated there could be up to two million motorists in the country driving without insurance, and this adds a further £30 to the premiums paid by every honest motorist. There is concern that the further anticipated increases could lead to even more motorists driving without insurance.

The AA British Insurance Premium Index indicated that premiums rose by 7.2% to over £1000 in the last quarter of 2009, the fastest increase for nearly sixteen years.

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