Who will be affected the most?
Motor insurance policies are based on a risk evaluation. Given that, 85% of young people are involved in accidents, the following groups are expected to be affected the most.
Young driver (18-22 years old): up to £1000 increase of premiums.
Older driver (65+): up to £300 increase of premiums.
Average driver: 50£ to 75£ increase of premiums.
Are small-business owners affected?
Changes might have an adverse impact on both the paid motor insurance prices paid by drivers as well as commercial insurance rates paid by SME’s. Additionally, the reinsurance and liability reinsurance prices might be impacted as well.
How does it impact on insurers?
The rate changes have been displayed in Direct Lines company report, costing the firm £217m profits. On the day of the announcement, the stock price of Admiral and Direct Line, dropped by 8.3% and 7.4%.