Where your money goes
The consumer body spoke to nine insurers and uncovered the fact that of every pound:
- 73p goes towards paying claims
- 23p pays for overheads e.g. admin and marketing
- A little more than 2p is profit for the insurer
So even though it may feel like you’re not sure where your money is going, the majority of your premium goes towards paying out when people make a claim. But almost half of this (i.e. 35p) is spent on personal injury claims and it’s the increasing levels of fraudulent claims that are making premiums higher than before.
Insurers discovered 130,000 fraudulent claims in 2014, worth £1.32 billion over all types of insurance. They therefore invest at least £200 million into the identification and prevention of fraud through a variety of measures, such as anti-fraud systems and not for profit organisations like the Insurance Fraud Bureau. These costs can then be passed on to you, and the Association of British Insurers (ABI) believe that £50 could be added to the annual insurance bill for every UK policyholder each year because of fraud.
It’s clear that car insurance is a key area of insurance fraud so it’s really important to shop around for your car insurance to make sure you’re getting the best deal and not having to pay the price of fraudulent claims. Our quarterly Premium Drivers Index shows how premiums are performing – whether they’re up or down each quarter and versus the same period last year so you can see how important it is to consider switching.
So why not compare car insurance now and see if you can get a better deal?