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Average car insurance premiums could increase by up to £75 a year as a result of a government ruling, industry experts have said.
A new formula for calculating compensation payments for those who suffer long-term injuries has been announced by the Ministry of Justice.
But the Association of British Insurers (ABI) called the decision "crazy".
The Ministry of Justice said it had no choice under the current law, and said it would consult on possible changes.
Shares in insurance companies fell, with some saying that profits would be hit by millions of pounds.
The change is due to take effect from 20 March.
Govt also raised insurance tax in the last budget IIRC.
If governments want to encourage people to take out insurance the last thing they should do is tax it. Levying extra tax is rarely an incentive to do something other than find ways to avoid it.
If governments want to encourage people to take out insurance the last thing they should do is tax it. Levying extra tax is rarely an incentive to do something other than find ways to avoid it.
I agree but it's one of those stealth taxes the government can raise without too much notice.
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