New research has found that due to the highly competitive
car insurance market, it is unlikely that providers will make a profit in 2009.
The new AA study finds that increased competition in the marketplace and the rising costs of insurance claims means that insurance providers will find it difficult to cover costs next year.
However, a competing survey by Datamonitor has suggested that insurance companies may actually make a profit this year - after 14 years of unfavourable market conditions.
A spokesperson notes that it could be a historic year for providers, although AA responds that due to the rising costs of claims, such optimistic forecasts are unlikely to be realised.
"In order to reach profitability by 2009, premiums will have to rise by at least 20 per cent over the next two years," AA spokesperson Andrew Strong says.
With a competitive online marketplace, that is unlikely to happen, he notes.
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