All businesses have to start with a principle and that is generally to make money. Insurance companies are no different from any other businesses. They are limited by the normal factors governing their profitability namely, charge too much and you lose or don\’t retain customers. Charge too little and you don\’t earn enough money to cover your costs and so either go out of business or have to charge more for your services.

The same is true with insurance companies and, given the growth in people now searching the Internet for the best insurance deals there has been and still is pressure on them to keep costs as low as possible whilst retaining profit. So how comes insurance premiums are increasing year on year?

There is really only one reason for it. A growth in the number and size of claims made by people like you and me. Some of these claims are made by criminal gangs that arrange \’faked\’ car crashes. These are primarily to organise claims for soft tissue (and therefore undisputable) personal injury claims affecting a number of occupants in a vehicle.

As we increasingly live in a litigious world people seem to want to blame someone and get cash. The rise in no win, no fee lawyers has led to increasing compensation claims through the courts as crash victims are hounded by organised law firms who specialise in ambulance chasing.

Years ago people in crashes may have woken up with a stiff neck the morning after and just shrugged it off. Nowadays the media bombards us with lawyers reminding us they can make someone pay for your injury however minor.

Manufacturers also don\’t help with increasingly flimsy cars that cost an astronomical sum to repair from the most minor of shunts. Plastic, colour coded to the colour of the vehicle which cracks and breaks, has replaced steel bumpers. Crumple zones, although a great leap forward in terms of passenger and 3rd party injury reduction, compound the issue by doing their job and reducing the car to a crumpled heap in the event of an accident.

Surely there must be a happy medium with plastic and other accident susceptible parts being realistically priced from the manufacturers.

The increasing number and cost of claims pushes up premiums beyond the reach of a lot of people who then decide to take a risk and drive without insurance which again pushes up prices as the insurance companies lose out on revenue and then have to pay out on claims where they cannot recoup their losses.

The situation is further compounded by the courts who, when dealing with offenders driving without insurance, impose fines valued at less than that offender would have paid in insurance premiums. In the eyes of the lawbreaker this makes the whole exercise worthwhile as the net result is annually they pay less with only the minor inconvenience of attending court…..if they are apprehended. Get away with their offence for two or three years they are hundreds or thousands of dollars better off.

Until a concerted effort at high level is taken to remedy the situation law abiding citizens will just grumble about it then continue to bear the brunt of the increased costs.

Author Bio: WCL Bauld for insurance in Halifax Nova Scotia. For more information on how insurance brokers can help reduce insurance costs visit http://www.wclbauld.com
For car insurance Halifax specifically please click here.

Category: Automotive
Keywords: car insurance, car insurance costs, car insurance prices, insurance factors