Pol­icy hike fears af­ter rule change

Daily Mirror (Northern Ireland) - - NEWS - BY GRA­HAM HISCOTT Busi­ness Ed­i­tor gra­ham.hiscott@mir­

AV­ER­AGE car in­sur­ance is likely to go up by £75 a year af­ter Gov­ern­ment changes to pay­outs for crash vic­tims. In­sur­ers’ pay­ments to those with lifechang­ing in­juries are re­duced to ac­count for the in­ter­est the lump sums can earn. But from March 20 the Min­istry of Jus­tice has cut this dis­count rate from 2.5% to mi­nus 0.75%. The neg­a­tive in­ter­est rate means in­sur­ers will have to fork out higher pay­ments. It is feared the firms will claw back the money through big­ger pre­mi­ums. Crit­ics warned the change will cost in­sur­ers £850mil­lion more a year, plus £5.8bil­lion to re­cal­cu­late past claims. Ac­coun­tants PWC pre­dict av­er­age mo­tor pre­mi­ums will rise from £450 to about £525 but over 65s’ poli­cies will go from £400 to £700 and 18 to 22-year-old driv­ers’ from £1,300 to £2,300. The As­so­ci­a­tion of Bri­tish In­sur­ers branded the changes “crazy”. Its di­rec­tor gen­eral Huw Evans said: “We es­ti­mate up to 36 mil­lion in­di­vid­ual and busi­ness mo­tor in­sur­ance poli­cies could be af­fected in or­der to over-com­pen­sate a few thou­sand claimants a year.” How­ever, oth­ers pre­dicted in­sur­ers could use the shake-up as an ex­cuse to raise prices. Min­is­ters will give the NHS an ex­tra £1bil­lion to cover in­creased com­pen­sa­tion pay­outs. The NHS will be among the pub­lic bod­ies most af­fected by the rul­ing due to its huge per­sonal in­jury li­a­bil­i­ties.

A crashed car RIS­ING COVER

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.