Motoring insurance premiums are set to rise as a result of new actions by the Lord Chancellor to increase potential pay-outs to those involved in road accidents.

According to Keith Nightingale, partner at Leeds-based solicitors Nelson & Co, plans to increase the payouts to accident victims will force insurers to up their premiums. This in turn will cause a increase in the number of uninsured drivers.

Mr Nightingale said: “The recent announcement by the Lord Chancellor will no doubt be seen as a victory for victims of accidents, who should receive arguably more compensation to cover their losses. At the same time, the industry will, no doubt, expect that the increase in premiums will lead to an increase in those driving without insurance. This could be disastrous from a personal injury and financial health point of view.”

In June the Lord Chancellor enacted powers given to him in 1996 to increase damages' payments. Since then, Mr Nightingale said, premiums had began to slowly increase.

There are over 300,000 reported accidents on the roads in the UK, according to the National Office for Statistics (1999). Of these, 4,500 result in fatality, almost 40,000 in serious injury and the remainder are considered in damage to the vehicle and property. The Association of British Insurers suggests as many as 1 in 6 drivers do not have motor insurance, costing the insured motorist an estimated £30 each per year.