The Office of Fair Trading (OFT) has decided to refer the car insurance industry to the Competition Commission.
In a report issued in May the OFT said it found evidence that insurers compete in a “dysfunctional way” that could push up premiums for drivers by £225 million a year.
Today it has decided that the matter needs more investigation and has passed the matter over to the Competition Commission, which will conduct an inquiry and will report in two years’ time.
The OFT’s earlier report said that the structure of the market could be making costs and premiums too high. It found evidence that insurers of at-fault drivers have little control over the way in which these repairs and vehicle replacement services are carried out or the associated costs. That led to an inflated cost of providing a replacement vehicle to not-at-fault drivers while their own car is being repaired.
"Competition appears not to be working effectively in the private motor insurance market," said OFT chief executive Clive Maxwell.
"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."
The OFT found that replacement cars cost £560 more on average than an adequate price, and on average repairs were £155 more than required.
The Association of British Insurers agreed with the OFT’s findings. Nick Starling, ABI’s Director of General Insurance said: “For too long insurers have faced inflated rates for credit hire cars and excessive hire periods which have led to higher insurance premiums for customers. Regulation of all players in the market to tackle excessive costs is needed”.
Sam Naylor
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It has taken the OFT two
It has taken the OFT two years to get to this point! They have dragged their heels for far too long...
Not Surprised
not suprised a large amount of insurance companies love to rip people off.
I found as well that all the companies with me were putting it high on purpose to put me off from insuring my vehicle (Peugeot RCZ 156 GT) by making it too expensive to insure (seems wrong to me trying to get me to break the law) which my best quote for 8 hours was £4,500 with £1,000 excess (a joke or what).
I eventually got it down to £1,600 with £800 excess (not brilliant but better than £4,500).
I hope eventually something will be done about insurance companies trying to rip people off for something they know very well that we must have.
Especially for those are young drivers and have insurance that costs more than their car, the best (worse) I know of is a mate who bought a £500 car and the insurance was over £2,000 for it.
Cynical. Moi?
So, who in the OFT has recently received a car insurance renewal that they have found unacceptable?
It is about time though. It's not as if the way the insurance companies operate has been particuarly secret.
I just hope something positive actually comes out of it and that the insurance companies don't just find another excuse for hiking prices.
tomy90 wrote: I eventually
Firstly let me make it clear i am not defending insurance companies. But surely its the responcibility of an individual to make sure they can afford to insure a car before they buy it? To complain that a company wanted £4,500 to insure your car is daft. They plainly didnt want the business, they are not under an obligation to take anyone on. You are obliged to have the cover which is why you should make sure its affordable before you buy a car!
Also i get fed up of hearing people moan that insurance costs more than the car is worth. What has that got to do with anything. You are paying the insurance company for the risk you pose to others mainly. If your mate with his £500 car ran into LGs new Ferrari that £2,000 wouldnt go very far would it?
Where insuance companies rip people off is overcharging for repairs, selling on accident details to scumbag legal firms etc. this makes claims a lot more than they need to be which leads to higher premiums