Car drivers face insurance hike

DRIVERS throughout the country will be handing out more for their car insurance this year, according to the latest research from online bank Egg.

In a survey of UK brokers, the bank found that a quarter (25%) expected car insurance premiums to rise by 10% or more while almost two-thirds (63%) anticipated a rise of at least 5%. The British Insurance Brokers' Association (BIBA) also sees premium rises this year but expects increases of between 5% and 10%.

Graeme Trudgill, technical services director at BIBA, said: 'Claims inflation is currently running at 8% so we would hope that rises would match this. Premiums will have to catch up in 2005 as last year they actually went down by around 3%.'

But the AA, which issues a quarterly British Insurance Premium Index, has rejected the claim that the cost of motor insurance will rise. Ian Crowder, public relations manager for AA Personal Finance said: 'We predict that the market will remain flat this year. Any rise is unlikely to even reach the rate of inflation.' He added: 'There is no credence to the Egg survey. It was only conducted on 50 brokers and it is not brokers that set the premiums ? it is insurers.'

However, the AA's quarterly index incorporates a whole basket of different motoring criteria across the country. Crowder admits that this may reflect cheap deals that are available only to new customers.

But not enough motorists are sourcing their own lower according to the survey. Just 20% of motorists ? 5.95m drivers ? accepted their renewal quotes last time they bought cover while a further 11% ? 3.4m drivers ? sought only one additional quote.

Andy Deller, director of banking and insurance at Egg, said: 'The average motorist could save £120 by keeping an eye on other insurance quotes and ensuring they are getting the best possible deal.'