CAR INSURANCE WARNING: Motorists paying 'RECORD premiums with WORSE on the way'

Between 2015 and 2016 all age groups except those under 21 faced increases in their average premium, said the Association of British Insurers.

Premiums ranged from £260 for those aged 66-70 to £973 for 18 to 20-year-olds.

The average premium is £462, up by 8 per cent since the first quarter of 2016 and adding an extra £33 a year to the cost of insurance.

But the figures pre-date the Government’s decision in February to slash the personal injury Discount Rate from 2.5 per cent to minus 0.75 per cent.

This could force premiums up because it is likely to hike payouts. Courts base compensation on the interest an injured party can expect to earn from investing the money – and the Government decision will reduce those earnings.

Independent analysts PWC estimated this could force premiums up by £50 to £75 on average, with young people facing the biggest increases.

And analysts have predicted that it could cost the NHS an extra £1billion a year in compensation.

Some insurers have already confirmed that motoring premiums have gone up as a result of the Discount Rate cut.

The ABI predicts “further waves of increases” between now and the beginning of next year. 

ABI Director General, Huw Evans, described the hike as reckless when it was announced earlier this year by the then Lord Chancellor Liz Truss.

And yesterday he said: “With inflation on the rise, motor premiums at a record high and the public purse under pressure, it’s concerning that the Government have yet to commit to delivering a fairer system for setting the personal injury Discount Rate. 

“We’re pleased the Government are going to bring forward a Civil Liability Bill to reform whiplash style personal injury compensation, but the benefits could be wiped out if they don’t defuse the Discount Rate bombshell. 

“At a time when politicians from all parties are calling for additional investment in public services, setting a Discount Rate that is fair for claimants, customers and taxpayers could contribute up to £1billion a year to help fund this.”