Esure, a prominent auto insurance provider in the United Kingdom, has warned its customers that it intends to raise premiums for the policies it provides. The company is citing the growing number of personal injury claims as the reason behind the rate increase. Esure has generated more than $3 million in auto insurance underwriting profits from January to June this year. This is a 80% decrease in the profits the company say over the same period last year.
Insurer highlights the deterioration of the claims environment
The insurer believes that the claims environment for the auto market has been deteriorating , which is leading to significant financial losses for many companies offering coverage. In order to recover from these losses, insurers have had to raise premiums, but this is beginning to put more financial strain on consumers, many of whom are already having trouble covering the cost of their auto insurance policies. As rates continue to grow, more drivers may be looking for less expensive coverage provided by smaller companies, while others may simply abandon their insurance coverage entirely.
Average cost of auto insurance coverage continues to grow
According to the Automobile Association’s British Insurance Premium Index, the cost of comprehensive auto insurance coverage has grown by an average of 5.5% over the past year. This comes after several years of insurance prices falling, but rising premiums were not entirely a surprise. Many insurers have had trouble effectively finding ways to recover their losses, either caused by natural disasters, fraud, and other issues. Because the problems that insurers face will not disappear any time soon, they must continue to raise premiums.
Claims inflation and fraud are placing more pressure on insurers
Claims inflation has begun to cause significant stress for insurers and many are also working to overcome fraud, which has become a very costly issue for the industry as a whole. Drivers are making claims more frequently and they are reporting more costly damage, and this is a trend that is not likely to come to an end in the near future.
