UK Car Insurance Market To Be Investigated
The UK car insurance market is to face an investigation by the Competition Commission after a watchdog report found that artificial charges could be pushing up premiums by £225m a year.
The Office of Fair Trading (OFT) has provisionally decided to refer the "dysfunctional" private motor insurance market to the competition regulator, who could spend up to two years probing the issues.
Its report revealed that insurers of not-at-fault drivers and some garages are given financial incentives to pass on the handling of accidents to credit hire organisations who tend to charge higher daily rates, inflating costs.
In particular the OFT found that on average repairs were being increased by £155 each time and the cost of replacement vehicles was being inflated by almost £600, because they were being hired for longer periods than necessary.
Although customers do not meet those costs directly, premiums are being pushed up by around £225m a year, which equates to an annual increase of £10 to all motorists.
John Fingleton, chief executive of the OFT, said: "Competition in this market does not appear to work well for drivers.
"We believe the focus that insurers have on gaining the competitive edge through raising their rivals' costs means that drivers pay more than they need to for their motor insurance policies."
Malcolm Tarling, spokesman for the Association of British Insurers (ABI) said he would welcome reform of the market.
"At the moment we are seeing far too many cases of excessive charges that far outweigh what would be a reasonable charge for a replacement vehicle.
"And these are charges that ultimately insurers are facing."
But Martin Andrews, director general of the Credit Hire Organisation (CHO), which represents the industry, denied credit hire companies were influencing insurance premiums.
He said: "The provisional findings by the OFT today conclude that the cost of any market dysfunctionality in the UK represent less than 2% of the insurers' total annual spend of approximately £13bn.
"Quite clearly then the costs of any market dysfunctionality are not the reason for the recent rise in the cost of premiums."
Mr Fingleton added that there was no "quick fix" for the problems but a more in-depth investigation by the Competition Commission, which has further powers to act on any findings, may be necessary.
Earlier in the year Prime Minister David Cameron held a summit with leading insurance firms in an attempt to clamp down on high numbers of compensation claims for whiplash injuries.
what do you think?
Shock horror. Insurance companies are ripping off consumers !! This twaddle isn't news it has been going on for years. Try making a claim on your insurance and seen
Claims management companies, accident management companies which handled outsourced work, all push up the cost of insurance, and some companies are even imposing a renewal fee, which is criminal, like being asked to pay booking fees when getting theatre tickets. BUT let us not forget that another charge is the tax on insurance, a legal necessity, imposed by the government!
The truth is claim management and insurance live in each others pockets. This was highlighted on the BBC programme Watchdog... So no matter how many years no claims that you have you still have your insurance going up. A lot of the time they say that is is because of unsured drivers.. so if you are caught driving without insurance, why shouldnt these people be made to pay a £1000 fine which goes into a pot for those that have had to get their own cars repaired because of these idiots? No they will not do this because they know that no matter what us decent hardworking people have to pay insurance on our vehicles, so we get screwed over, yet again.
Compare the price of car insurance in the UK and, say, New Zealand, and ask yourself why the UK is so vastly more expensive.
Insurance tax is 6%..... Very low, if they reveal the cost of claims,payouts ect then youll soon see why insurance is always on the rise, its a business at the end of the day, this investigation will more than likely waste 2 mill, wat a waste of time
Not a moment too soon!!
Not before time
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who remembers last year when the government ruled that women should pay the same as men? Did mens insurance go down to find a happy medium? NO IT DIDN'T. I t stayed the same so who won that game. Men, women or the insurance companies and the government through higher income, tax revenue and probably a few share buys to plump up personal coffers. I don't think that any of this was noticed.
are they going to investigate the power companies and banks as well?????
should stop all these companies making claims after accidents - no win no fee as most insurance companies don't even contest them on your behalf even after you tell them the claims are a load of rubbish they just settle - thats what puts the premiums up. STOP THE AMBULANCE CHASERS AND MAYBE INSURANCE WILL COME DOWN
Why should i have to loose my no claim bonus and have to start all-OVER AGAIN on each of my second or third car when i go to insure them. Surly you can only drive one car at any given time.. THAT I DO THINK NEEDS TO BE LOOKED AT..
Your English needs looking at!