Car insurance firms blame fraud for rise in premiumsPersonal injury claims flood in despite safer roads

22 July 2016

Car insurance premiums have rocketed even though Britain's roads are safer than ever 

Fraudulent personal injury claims have been cited as a key factor behind the rising cost of car insurance.

Which? research has found that third-party personal injury claims account for up to 49% of some car insurance companies’ claims spend.

That’s despite the amount of accidents that result in an injury having dropped by 60% since 2000.

When we questioned the nine biggest insurance companies as to why premiums have increased, they put the majority of the rise down to fraudulent injury claims.

Find out more: Best and worst car insurance – more than 30 providers rated

Personal injury claims drives up car insurance premiums

The average driver forks out almost £1,000 a year for comprehensive car insurance, compared to £450 in 2000.

Having asked nine of the biggest UK insurers to outline exactly where this money goes, we discovered that 73p of every pound is spent on paying claims, while 23p goes on overheads such as administration and marketing. Just over 2p of every pound is accounted for by profit.

Claims making up the largest part of your premium is no great shock, but the breakdown of claims spend is more surprising. Aviva told us that 49p in every pound of claims spend goes toward paying third-party personal injury claims. The spend on personal injury claims for the Co-operative, Esure and Shiela’s Wheels was 38p in every pound.

An Aviva spokesperson told us: ‘At a time when accidents have continued to fall across the last 15 years, it seems at odds that the number of injury claims during this time has almost doubled.’

According to the Association of British Insurers (ABI), fraud can add up to £50 to the annual insurance bill for every UK policyholder.

Which? Money editor, Harry Rose said: 'Consumers shouldn't have to foot the bill for dodgy claims so insurers must crack down on fraud while ensuring genuine claims don't get turned down. And with premiums more than doubling since 2000, consumers should shop around to make sure they're getting the best deal.'

  • Our full investigation appears in the August issue of Which? Money magazine. If you'd like to read our latest investigations and expert guidance on insurance, savings, investments, pensions, tax and more, try Which? Money for two months for £1.

How to save money on car insurance

Car insurance can be expensive, yet there are plenty of ways to make a meaningful saving. Here are five top tips to help drive down the cost of your premium.

1. Set the right excess

Setting a higher voluntary excess - as long as it’s one you can afford, can lower premiums. Setting your voluntary excess at £500 instead of £0 saves £117 on average.

2. Choose your occupation carefully  

Many drivers can describe their job in different ways. For example, if you work in publishing and you say you’re a journalist you’re likely to pay more than if you put down editor or reporter.

If you’re a housewife or househusband, putting yourself down as a homemaker can help you save money. However, never lie. Don’t say you’re a butcher, if you’re a baker. This is considered fraud and you could be prosecuted.

3. Avoid modifying your car

Even a small modification to your car, such as new alloys, can cause premiums to rise. If you’re going to make any changes to your vehicle, discuss them with your insurer first.

4. Pay for your cover annually

Paying for your cover monthly involves taking a loan from your provider, which some may charge a monthly fee for setting up. APR varies and can also be as high as 40%. If you can afford to pay monthly, a 12-month 0% purchase credit card could be used as an alternative.

5. Avoid auto-renewal

Insurers save their best deals for new customers, so rather than just allowing your policy to roll into another year, shop around and see if you can find yourself a lower premium. Even if you want to stay with your provider, you can use this as a platform to haggle down your premium.

More on this…