According to reports,
something like 5% of all the motorists on British roads are
driving without any car insurance whatsoever. Furthermore,
it appears that the vast majority of them are under the age
of 25. Could this have something to do with the fact that
this particular age group suffer from the highest car
insurance costs of all?
This is not something to blame the insurance companies for,
because the hard and unpalatable fact is that the under 25
is are responsible for a very high proportion of accidents
on the roads. Partly this is due to inexperience, but much
of it is because of overconfidence and, in the case of the
males, testosterone induced recklessness. It's a very
reasonable comment to say that if car insurance was only
granted to people between the ages of 25 and 65, average
premiums would fall considerably.
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Along with the increase in
the cost of insurance policies over the last few years have
been a growth in the number of people who are obliged to pay
monthly, rather than pay in advance, as has been the norm in
previous years. This is hardly surprising, since insurance
rates have risen for all risk categories at a rate well in
front of inflation. There are many reasons for this but the
main ones cited by the insurance companies are an increase
in fraudulent claims, and the compensation culture. It may
come as a surprise to learn that far from feathering their
own nests, most car insurance companies are actually running
at a loss on this type of business, which indicates that
further price increases will be necessary in the future if
they are to at least balance their books.
This brings us back to the necessity for so many people to
pay their fees monthly. This was completely unheard-of
several years ago, but market conditions have forced it upon
the insurance companies, because they either accept monthly
payments or the client goes elsewhere. Many of them have
tried to make up for the shortfall by charging interest, or
placing management charges, on the people who pay monthly,
but this is a very competitive market indeed in which price
is the greatest motivator, which has led to a price war
between many insurers. The result may be a good thing for
insurance buyers in the short term, whether this will be a
good thing in the long-term remains to be seen.
We are seeing price resistance amongst motorists; fuel
prices in particular are driving down the miles that we
drive, and now higher insurance costs and making many people
question whether they really need to run their cars or not.
Already, short term car insurance has become a major seller
as people seek to minimise the use of their cars and rely
upon foot, bicycle or public transport for the majority of
their transport requirements. Perhaps we will see an even
greater increase in the number of people buying monthly car
insurance in the future.
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