LONDON, Feb 3 (Reuters) - A two-year slide in British car insurance premiums is bottoming out and prices could rebound in 2014 as insurers realise they overestimated the impact of a crackdown on fake injury claims, the head of insurer LV said.
LV Chief Executive Mike Rogers said the plummeting cost of insuring a car was “unsustainable” because insurers had expected claims costs to drop more sharply and therefore slashed premiums too aggressively.
“Rates appear to have stopped falling... we should see rates start to creep up again,” he told Reuters.
Legal reforms aimed at tackling a so-called compensation culture in Britain has cut the incidence of false personal injury claims, leading insurers to cut estimated payouts.
This, alongside greater competition as more customers started using price comparison websites to buy insurance, has helped drive a hard drop in premiums.
According to the Association of British Insurers (ABI), overall car insurance premiums fell 9 percent over the last year. LV said in a trading statement on Monday its gross written premiums fell almost 8 percent in 2013, despite growth in customer numbers.
Rogers added that prolonged wet weather and storms throughout the last quarter of 2013 would have limited impact on insurers’ financial results as the year as a whole saw benign weather conditions, despite a stormy December.
“Weather related losses are entirely within what is expected,” he said.