Aviva, arguably Britain's biggest insurer, has warned that premiums look certain to rise in the next year. The announcement is a poorly-timed from a public relations standpoint as the group has just announced its profits are up 21%.
In the first six months of 2010, the company, which owns both the RAC and the former Norwich Union, made post-tax profits of £1.2 billion. It said long-term products such as life insurance were performing particularly well.
While premiums are already on the up, rising 7% overall compared with the second half of 2009, and motor insurance rises in double figures, the company says more increases are on the way. In particular it blames the rises in injury claims from motor accident, with the company's head Davis McMillan saying "there is no sign of a let-up in this inflation."
Across the industry it appears that rising costs are outweighing the effects of competition on prices. One estimate says the average motor insurer spends 15% more than it receives in premiums.