Claims costs 'are an industry-wide problem'

Rising costs are a problem for all motor insurance providers in the current market, according to Zurich.

Earlier this week, the firm announced plans to increase premiums by 20 per cent in order to cover losses resulting from an increase in claims.

However, Steve Lewis, chief executive of Zurich's UK General Insurance arm, said other cover providers were likely to be doing the same.

"As this is an industry and distribution-wide issue, our colleagues in the Direct channel are taking similar action on their book," he commented.

Mr Lewis went as far as to say that if claim numbers continue to rise, even a 20 per cent increase may not be enough for firms to break even.

He commented: "As an escalating market issue, we recognise that all insurers will be seeing this trend, but by acting now, we can move quickly to provide our customers with a sustainable level of long term pricing."

Deloitte reported last month that few motor insurance providers have recorded a profit since 2007, with a fall in investment market earnings also affecting their balance sheets.

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2010-01-20 13:02:25 © Moneyextra.com