Why does car insurance cost more than on the continent?

Toy car on global mapThe rising cost of car insurance is never far from the headlines and a recent report has revealed that we are paying more for cover than our continental cousins. Quoteline Direct looks at what’s driving-up premiums and why Britain’s 45million motorists are getting short changed.

A comparison of European car insurance costs has found ‘huge differences’ across the continent and in the UK we’ve got the dubious honour of paying the highest premiums. Much of the blame has traditionally been pinned on an ‘epidemic’ of fraudulent claims, combined with ever-increasing insurance tax, but new figures suggest that sky-high medical pay-outs also play their part.

Bogus compensation claims have long been the bane of British motorists with incidences of whiplash fraud increasing by 50% over the past decade. An attempted clampdown has had some success (last year insurers identified 70,000 fraudulent claims adding-up to £780 million), but we haven’t managed to shrug-off our reputation as ‘the compensation capital of Europe’.

However, that might be about to change with new legislation designed to put the brakes on dodgy claims. Changes to the law mean that all whiplash claims will now need supporting medical evidence and there will be a fixed tariff for claims. The moves have been warmly welcomed across the board and the financial gurus at PwC have calculated that the measures could save motorists £40-50 on annual cover.

Unfortunately, any savings made on fraudulent claims are likely to be wiped out by increases to Insurance Premium Tax (IPT) which has doubled in the last five years. The last jump was from 10% to 12% in June 2017 meaning that the UK now has the sixth highest level of IPT in Europe.

To make matters worse we’ve got some of the highest medical and care costs in Europe. A survey by a leading motoring organisation found that personal injury pay-outs in the UK can be up 17x higher than on the continent. Catastrophic injuries demanding long-term care could cost as much as £10million in the UK compared with £6million in Germany and France. In some countries the state covers much of the cost (in order to keep premiums low) and insurers in Sweden would need to pay-out just £600,000.

While future car insurance costs are uncertain, it’s essential to keep premiums sensibly-priced, or more motorists may be squeezed out of the market, and everybody will carry the cost. In the meantime, if you are looking for competitive car insurance, you’ll have to go a long way to beat Quoteline Direct: get a quick online quote or Tel: 0161 874 8029 to speak with a member of our team.


Leave a Reply