Motor premiums set to rise by 10%

Motor insurance premiums in the UK are set to rise by around 10% in the coming year, according to analysis by EMB, Europe’s largest firm of non-life actuaries. Despite the widespread public feeling that premiums are already too high, researchers found that motor insurers are not charging sustainable premium rates, particularly for private motor.

The conclusion is based on EMB’s annual review of the returns that all insurers in the UK make to the Financial Services Authority. Their findings show that the £10bn market was able to achieve a modest profit during 2006 only by releasing more than £800m in reserves from previous years. Even with these releases, they relied on investments to make good the shortfall between premiums and the amount they spent on claims and expenses.

For every £100 of premium motor insurers received they paid out