AA Insurance: Motor insurers "unlikely" to make a profit in '09

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www.moneynews.co.uk > General finance > AA Insurance: Motor insurers "unlikely" to make a profit in '09

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AA Insurance: Motor insurers "unlikely" to make a profit in '09

AA Insurance has claimed that the motor insurance industry is "unlikely" to make profits in 2009, citing inflation and premium competitiveness as the primary reasons.

Currently the cost of damage to property and vehicles is rising by about five per cent a year according to Andrew Strong, chief executive of AA Insurance, which pushes up the price of claims.

In addition, as accident victims become more aware of the benefits of making personal injury claims, they have risen by ten per cent annually in recent years.

During 2007-08, the company predicts that the cost of claims will outstrip the cost of inflation by around 12 per cent.

Mr Strong therefore believes that "in order to reach profitability to 2009, premiums will have to rise by at least 20 per cent over the next two years".

He suggested that online buying is pushing the price of premiums down, as consumers are able to find the cheapest car insurance quotes with the minimum of fuss.

Research from the AA released last month showed that many Brits still do not understand the new numberplate classification system.
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