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20-year losing streak for car insurers
According to UK investment consultants Ernst & Young, the British car industry is on a 20-year losing streak, and not set for a return to profit until 2014.
This means the UK car insurance industry has paid out more in claims than it’s taken in premiums since 1994 – which may come as a surprise to many motorists, stung by the rising cost of their annual renewal.
Young drivers in particular have found it increasingly difficult in recent years to get affordable cover, with some reports suggesting it now accounts for at least a fifth of their wages.
However, Ernst & Young say that even with a two-year rise in prices, which has just (apparently) ended, there has been no return to profitability for insurers. A situation that’s now unlikely to change until new legislation aimed at curbing ‘no win, no fee’ lawyers comes into effect.
This isn’t set to happen until April 2013, which means its impact – intended to reduce expensive personal injury claims – won’t be felt until 2014 at the earliest.
While some insurance firms have shown overall profits, Ernst & Young says this is due to good investment returns, rather than the business itself.
Data on the loses comes directly from the Association of British Insurers.
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