RAC warns of premium rise
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by Derren Hayes • Commercial vehicle insurance is set to rise by up to 10% this year because too many insurance underwriters have been operating artificially low prices, warns the RAC.
Prices fell over the last few years because some companies were writing off unprofitable business in attempts to gain market share, it says.
There are now more than 80 motor insurers in the underwriting business and while many were content to make a loss to gain a foothold those losses are now taking their toll.
The RAC believes insurers would like to boost prices by 15% this year but are fearful of losing business to rivals by raising premiums too high. Nigel Richardson, motor schemes manager for the RAC, says: "Our feedback tells us that insurers are really hurting and there are now some signs of slight premium increases."
Premiums rose by 7% last year, largely due to the increase in truck theft that cost the industry £250m.
Michael Smith, chief executive at the Motor Insurance Repair Research Centre at Thatcham, also expects to see rates move upwards: he cites the high price of vehicle parts as well as theft.
Next year the research centre plans to introduce a scheme linking insurance premiums to vehicle security. A similar scheme in the domestic car insurance market has cut thefts significantly.