New Government plans could make elderly and young drivers 'uninsurable'
The Government is being lobbied by lawyers to increase the payouts and it is understood that Justice Secretary Liz Truss will do so later this month.
Mohammad Khan, head of general insurance at accountancy giant PWC, warned that this would force insurers to hike up premiums, which last week hit record highs of £462 for an average comprehensive motor policy.
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He said: “The biggest impact will be felt by younger drivers, their costs could go up by 80pc, as well as older drivers. If they go ahead with this, a significant proportion of the population will become uninsurable. “That’s a horrible position for elderly drivers that depend on their cars.”
The Ministry of Justice is set to increase compensation payments by changing the way they are calculated.
At the moment, payouts are reduced by 2.5 per cent to take into account the extra people would get from investing the money.
Truss plans to cut the discount rate and Khan estimates that this will increase the average cost of car insurance by £100 per person or 20 per cent.
Association of British Insurers director James Dalton said: “A significant downward change in the discount rate would be wrong.
The Government plans to increase the size of compensation payments to accident victims
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