The Office of Fair Trading (OFT) has referred the motor insurance market to the Competition Commission over the concerns that the structure of the market was making costs and premiums unnecessarily high. After discovering at-fault drivers had little control over the way in which repairs are carried out and replacement vehicles provided to not-at-fault drivers, the Competition Commission will take a look at the factors which may result in drivers being ripped-off.
Worth an estimated £9.4bn in the UK, the average insurance premium has risen 60% in the four years to the end of June. The Commission has two years to report so it will take some time for a decision to be made by the Competition Commission, whilst customers continue to pay inflated prices for motor insurance.
Nick Starling, the ABI’s director of general insurance, welcomed the review “The OFT found what insurers have known for years – that when a customer has a crash that is their fault, their insurer has little control over the cost of the subsequent claim.”
“Regulation of all players in the market to tackle excessive costs is needed, and we look forward to working with the Competition Commission to bring much needed reforms to the market that will, in turn, result in lower car insurance premiums for everyone.”
Clive Maxwell, chief executive of the OFT, said: “Competition appears not to be working effectively in the private motor insurance market. The insurers of at-fault drivers appear to have little control over the bills they must pay, and this may be leading to higher costs for them and ultimately higher premiums for motorists.”
Oct, 01, 2012