Drivers advised to “steer clear” of rising premiums

A new report has warned drivers that they could be facing steep rises in the insurance premiums they pay and advised such motorists to shop around for better deals.

According to Defaqto, other insurance providers are expected to follow the move made by Norwich Union, which increased its premiums by up to 16 per cent in September.

However, the research company states that the level of competition in the motor insurance sector, which is worth £7.4 billion, still makes it possible for motorists to take advantage of competitive deals.

"The intense amount of competition in the market at present is keeping comprehensive premiums from rising despite well reported industry views that they must increase," said Brian Brown, author of the Defaqto report.

"With the internet it is now so easy for customers to shop around and so many insurers are still giving introductory discounts, cashbacks or guarantees to beat other quotes, that there is little if any need for customers to stick with their existing insurer when faced with premium increases."

An alternative method that some providers have been employing to raise revenue is the introduction of fees for certain facilities, such as changing an address or cancelling a policy.

Some 66 per cent of insurers reportedly charge for cancelling a product agreement, with some fees as high as £75, while 62 per cent charge for policy adjustments.