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Private motor insurance premiums have risen by 16 per cent in the last year and by one-third in the last two years. As frustrating as this may be for the average motorist, the impact is mostly being felt by those who need to insure a fleet of vehicles.
There are four key factors that are contributing to the rise of insurance for freight vehicles, many of which have been influenced by the government.
Ogden rate
This is a technical mechanism impacting on personal injury claims that mostly arise from motor insurance policies.
This rate went down significantly in March last year, causing insurance premiums to rise significantly as the number of people killed or injured in road traffic accidents rose to six per cent.
Insurers have responded in an effort to protect themselves from the rising trend of personal injury claims. This has impacted highly on the lowering of premiums on policies where a telematics box is installed, as the safety of the driver can be measured.
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Insurance premium tax
First charged in 1994, insurance premium tax (IPT) gave the government a way to tax services not subject to VAT. The rate started at 2.5 per cent and has now risen to 12 per cent, impacting fairly significantly on insurance premiums.
Brexit
Whatever your opinion on Brexit, the sentiment created will have an effect on everything. It is giving insurers a sense of financial uncertainty, making them more averse to risk and therefore increasing premiums and making them find ways to lower risk and to prove safety to take on risk.
There is a concern that a move out of the EU will cause IPT to be scrapped and replaced by 20 per cent VAT, so insurers are protecting themselves from these costs by pushing up premiums.
There are some simple ways to keep HGV insurance fleet costs down. Reviewing your insurance requirements and shopping around can definitely help, with a broker such as https://www.quotemetoday.co.uk/hgv-insurance a great place to start.
Inflation
Those old enough to remember double digits wont be too concerned by three per cent; however, this is steadily rising and impacting on the overall costs of insurance. Brexit and the devaluation of sterling have had the effect of making imports more expensive, causing a knock-on effect on insurance.
