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British Car Insurers are Profitable After 20 years

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British Car Insurers are Profitable After 20 years

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Tighten up on deceptive claims filed by compensation culture appears to be giving results, regardless of falling premium rates

Car insurers from Britain have made their first annual profit collectively after 20 years which shows that the clampdowns on deceptive claims have started showing its results. Consultants at EY said that they have paid out £98.50 for every £100 received in premium last year. Only the second time when sector has swung to profits since the study begun thirty years ago. Hopes of industry getting back into the black received a bump last year when the reform process was started by the government of UK. They started clampdown on the soaring culture of compensation. The revolution has been set in opposition to a most minute trend of decreasing the average premium rates.

Catherine Barton is the head of retail property and casualty actuarial for Europe, Middle East and Africa at EY and she said that high rates driven by a extensive claims culture have meant that insurance sanction has demonstrated to be constantly running at a loss over the last decade. Returns were heavily supplemented by additional profits or trappings from other sections of the business.

A research has been released by the Association of British Insurers which explains, how fake car crashes dent the insurance culture and increase the rate of fraud to a record of £1.3 billion in 2013. It was a jump of an 18% from the previous year and costs almost double of shoplifting bills of UK.

The Government has taken measures to handle the problem, including cutting of fees for personal injury lawyers, and banning the payments for exchanging the details of policyholders. These initiatives are still helping the system as supporting measures but the question is that, would insurers plunge back into green once they pulled out as they did nearly a decade ago.