Norwich Union hikes car insurance premiums�|�Reuters.co.uk

Norwich Union hikes car insurance premiums�|�Reuters.co.uk: "Norwich Union hikes car insurance premiums
Fri Sep 1, 2006 7:18 AM BST
Email This Article | Print This Article | RSS [-] Text [+] By Clara Ferreira-Marques
LONDON (Reuters) - Norwich Union has become the first major player to hike motor premiums in response to rising claims costs, but analysts say tight competition could make it tough for others to follow.
Norwich Union said on Thursday it would raise car insurance premiums by an average of 16 percent over the next 12 months in the UK, a market where competitive pressures have kept a lid on rates even as repair costs and injury claims rise.
'We've stuck our head above the parapet, but you can expect to see the market following our lead,' a spokesman said. 'We may lose some market share, but the key is profitability.'
The premium hikes, which will kick in from this month, will range from 6 percent for policyholders with good claims records to 40 percent for high-risk drivers, compared with an average rise of around 5 percent in the first half of the year.
Aviva, which has around 12 percent of the UK motor market, had said earlier this month it expected 'widespread action' on motor policy prices as the cycle nears the bottom and insurers return to market discipline and a drive for profitability.
Royal Bank of Scotland, the UK's largest motor insurer through Direct Line and Churchill, has said it will maintain a 'disciplined approach' to pricing.
Annette Court, head of RBS Insurance, said on Thursday that current prices were unsustainable and needed to rise but declined to comment on whether the bank planned to lift rates."