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Drivers in the U.K. face automobile insurance premium increases of 25 percent or more within the next 12 months warns Mintel, a marketing research firm. The average premium in 1999 was 拢226 ($336); it’s expected to rise this year to 拢283 ($421), and to reach an average cost of as much as 拢353 ($526) by 2001.

Analysts cite several reasons for the increases.

For most of the 90’s U.K. auto insurers have been engaged in a price war that has kept premiums at artificially low levels; companies are now trying to return to more realistic pricing, but even with the increases, most insurers won’t achieve profitability on auto insurance before 2001.

More claims and larger settlements for compensation, that now include awards for ongoing care expenses and loss of earnings, have increased the costs of recovery for personal injuries.

More cars and more uninsured motorists have also added to insurers costs. It’s estimated that there will be three cars in the U.K. for every five adults, which would generate an additional 1.6 million auto policies. According to the Mintel report there are 1.5 million uninsured drivers in the U.K., which costs the insurance industry between 拢200-300 million ($298-$447 million) a year.

The increases should result in more selective shopping by consumers for the best rates, and increasing use of Internet sites in order to find them.

Topics Trends Auto Pricing Trends