Insurance premiums may rise due to insurance fraud
Auto insurance prices in the United Kingdom may be in danger of spiraling out of control, according to AA Insurance. Over the past few years, insurance premiums have been falling for drivers throughout the country, but this may soon change if action is not taken against the growing problem of insurance fraud. AA Insurance suggests that fraud is becoming a very problematic issue in the auto insurance sector, with insurers facing significant financial losses from fraudulent claims.
Fraudulent claims are having an impact on insurers and consumers alike
Insurance fraud has an impact on both insurance companies and consumers. When insurers face financial losses, they must take steps to recover. This generally means an increase in premiums for consumers. AA Insurance notes that the number of vehicle accidents in the UK has fallen over the years, but medical claims associated with such accidents continue to rise. This is putting more strain on insurers, who are beginning to increase premiums in order overcome this issue.
Lack of action against insurance fraud could lead to premiums spiraling out of control
Janet Connor, managing director for AA Insurance, has expressed concern that insurance fraud will become a costly problem for drivers and insurers. She suggests that if firm action is not taken against auto insurance fraud, the UK could see a repeat of when insurance premiums rose significantly during 2010 and 2011. During those years, the average cost of auto insurance policies rose by 40% over a 12 month period.
Average cost of auto insurance coverage is down, but not for long
Currently, the average cost of auto insurance coverage in the United Kingdom is approximately $700 a year, according to information from the first three months of this year. This is lower than the premiums reported during the same period of 2014, but rates are expected to rise as fraudulent claims become more common. UK lawmakers may have to take action to address this issue in order to mitigate the rising costs associated with auto insurance fraud.