Car insurance costs 'increased during 2009'

The average cost of car insurance rose at a faster rate than at any time over the past 15 years during 2009, it has been reported.

According to AA Insurance Services, prices increased by 14 per cent over the last 12 months.

Speaking to the Scotsman, the firm's Ian Crowder noted that premiums have continued to rise during the recession, despite competition in the cover market.

He stated: "Because of the recession, motor insurers have seen investment returns falling and have been digging into ever-diminishing reserves to meet claims.

"At the same time the cost of claims has been rising – at one stage the industry was, on average, paying out 110p in claims for every 100p taken in premiums – a situation that is clearly unsustainable."

Last month, professional services firm Deloitte noted that the majority of motor insurance providers have made losses during the recession.

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2009-12-29 11:48:56 © Moneyextra.com