RAC Insurance director Mark Godfrey said: “The current way the discount rate is calculated is flawed and the recent government change to it was ill-advised as it’s already caused insurance premiums to increase by 10% or more as well as adding a £6bn bill to the running of the NHS.
“Young drivers who pay the most for car insurance are even worse affected as their premiums are going up by 20%, increasing already high premiums by more than £200 a year.
“It is good news a consultation is now taking place on the discount rate, but we would urge the Government to carry this out as fast as possible. An independent body setting it could be a very sensible way forward as it may help to avoid costly mistakes such as the one we’ve just witnessed.
“In the meantime we would urgently like to see the recent change to the discount rate being reversed or moderated until a new methodology is agreed. It has become yet another punishing cost the motorist has to bear along with the new Vehicle Excise Duty increases and, come June, a doubling of Insurance Premium Tax in under two years.”