UK car and van insurance premiums increased 10.7% and 9.1% respectively in the final quarter of last year, according to the British Insurance Brokers’ Association (BIBA).

Fraudulent whiplash claims and a change to the discount rate used to calculate compensation for catastrophic injuries are to blame, it says.

The industry lost £780 million ($1.39 billion) to fraudulent claims last year. Drivers have also been penalised after the insurance premium tax (IPT) increased to 12% last June.

BIBA is pushing for a cap on the IPT and says it is working on all other fronts to moderate the rise in premiums.

“We believe insurance premium tax is a tax on protection, and is now at a level that impacts the uptake of insurance,” Executive Director Graeme Trudgill said. “We want the Chancellor of the Exchequer to commit to no further increases in this regressive tax.”

Meanwhile, the Association of British Insurers says the average cost of a motor claim grew to a record £2936 ($5220) last year, driven by higher costs for theft claims and vehicle repairs. The industry paid about £8.1 billion ($14.4 billion) in motor claims last year.

“Putting a lid on excessive costs, which end up being paid for by motorists, remains a priority for insurers,” Assistant Director, Head of Motor and Liability Rob Cummings said.

“This makes it all the more important for the Government to play its part, by pushing ahead with its reforms to personal injury compensation without further delay.”