In the past, insurers subsidised their underwriting performance by gains made on their investments, enabling them to keep premiums at artificial levels. While the pressure bubbling in the insurance industry is resulting in premium hikes, it may lead to a positive development. A more efficient market could ensue where premiums are closely linked to an individual policyholder's risk. Those who protect their property and have a good claims record are identified and rated differently to those who do not. And the trend in personal lines insurance is towards more sophisticated market segmentation within geographical areas.
Consumers can still reap the benefits of aggressive competition.
This may force the rest into smaller premium hikes or face a loss in market share. You'll be offered a discount and you may still get in at last year's rates - but the downside is the upfront payment. If your car is insured with your household contents you are charged a better rate. A higher voluntary excess cuts your premiums. Ensure your car's insured value is market-related.