Zurich to increase motor premiums by 20%

Motorists have been warned to expect steep rises in their insurance premiums this year after a leading provider raised its rates by 20 per cent – and said it expected competitors to follow suit.

Zurich claimed its double-digit percentage increases, to come into effect in March, were needed due to rising third-party claims and an increase in personal injury (PI) claims. The Association of British Insurers estimates that PI claims and their associated legal expenses rose by 22 per cent in 2008, to about £6.2bn, and were expected to reach £10.9bn by 2012.

Market research group Mintel has found that the cost of claims can rise even if the number of claims falls – as in 2007.