Car insurance is a government approved rip-off

The good news for drivers is the cost of car insurance is likely to go down later in the year.

While motorists are unlikely to shed any tears, few car insurance firms are likely to turn a profit, according to a market review by international accounting consultants Ernst & Young.The survey shows two-thirds of motor insurers have had their best trading in five years, but profits have peaked as the value of premiums due later in the year will fall.

The Insurance Blogger has a theory here; the car insurance industry is a racket.

The law says drivers must have at least third party cover to put a vehicle on the road, which means the industry has a captive market created by legislation.

Because motorists are caught in the insurance net, they have no choice but to pay whatever premiums insurers demand.

Over the years, they have developed arcane methods to determine the premiums that are not far removed from reading the entrails of gutted animals, practised by druids and ancient civilisations wanting to foretell the future.

Then along came lawyers. They spotted they could milk the industry like a cash cow with personal injury claims and the insurers paid up and made money off referrals because they could always raise premiums to cover their losses.

So everyone has treated the poor (literally) motorists as a cash machine forever giving more because the motorist had no choice other than to pay by law.

And the theory? Well, if the government formed an insurance agency that regulated premiums and the amount paid out on claims, the problem of claims management and soaring costs would disappear.

The problem was caused by the government, even though they blame everyone else for the predicament drivers are in, and it should be the government that sorts the problem out.

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