The UK's private motor insurance industry is "not working well for motorists", a report by the Competition Comission has found.
The private motor insurance market in the UK is worth some £11 billion in the UK, but has faced criticism both from motorists and the wider motor industry for what has been seen as dysfunctional business practices.
In 2012, the Office of Fair Trading called on the UK insurance market to make its business more transparent, and asked the Competition Commission to conduct its review.
In particular, the Commission says the process of settling non-fault claims is "complex" and "increases the costs of replacement cars and repairs", resulting in higher premiums for drivers. The report estimates that those costs could raise cumulative premiums by as much as £200 million per year.
The report also noted that too many accident repairs are not completed to the required standard.
Customers also have too little information to hand when being sold add-on products (such as hire cars) by insurance companies, the report found, meaning insurers have a point-of-sale advantage. The Commission says that makes it hard for consumers to identify the best insurance deals.
Price comparison websites also need to review their practices, says the report, as the contract clauses between insurers and those websites often states that the prices offered must be the same across all comparison sites. That reduces competition, says the Commission, and can lead to higher premiums.
The report has also highlighted solutions to those problems, namely offering insurers more freedom over the management of a claim. In addition, the Commission has suggested that repairs should be audited for quality, and that better and clearer information be available to advise motorists on the best deals and offers.
The Commission's deputy chairman Alasdair Smith said: "Our provisional view is that many drivers of the UK’s 25 million privately registered cars are footing the bill for unnecessary costs incurred during the claims process following an accident. These costs are initially borne by the insurers of at-fault drivers, but they feed through into increased car insurance premiums for all drivers."
The final full report into the UK private motor insurance industry will be published in September next year.
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Claims Management and Car Hire
Surely for the vast majority of drivers being kept mobile is what matters the most and whilst I am not advocating the return to the days where a driver had to settle for a tatty body shop provided Nissan Micra, something in the Insignia/Mondeo class is perfectly adequate for the majority and a lot cheaper for all. If it is so important to an individual to have the same type of car as his own in the event of an accident then let that person buy an add-on to their policy to cover it and not charge the rest of us.
A few years ago my 6 week old Audi A6 was damaged by an airport parking company and I was being pressured by the insurance company to get an identical car whilst it was being repaired, however they could not find one so the repair was being delayed. I settled for an Insignia and was perfectly happy (I just wanted my car repaired quickly and to have it back) and no doubt the other party was as the rental cost would have been much lower than the Audi.
There seems to be no logic or
Your damned what ever you do.
For example I am 42, been driving since 17 and have never made a claim.
Moving from down and out Gorton Manchester where my MG TF was parked on the street, to the more seductive Aigburth Liverpool, where the MG is parked on the Drive on a private road resulted in a £130 hike in Premium, due to the Liverpool tax I guess.
Recently I sorned the TF and brought a late Rover 25 1.4L, now logic would dictate that a 1.4 tin top supermini with Thatcham security would see me getting at least a small refund on the 6months of insurance remaining?
Nope another £130 because the Rover is higher risk!!!!
Let alone the fact that I was paying a £1000 more at a northern address than down south.
Finally, I managed to lower my premium by simply adding my Husband as an insured driver...
Now please tell me where is the logic, fairness, transparency?
peterover wrote:There seems
The only fair way is to charge a flat rate to everyone, but unlikely to happen unless enforced by legislation.
Your only one risk factor in a risk profile for your policy. Your car quite clearly seems to be a high risk factor, which older cars tend to be. On average it will probably be involved in more accidents, breakdowns and driving offences. There will be data to back this up. Obviously other factors like your profession, age, your location and what and when your car will influence the price to varying degrees and also varies on how each insurance company perceives the risk i.e. their business model.
Best way is before you buy another car always check out on comparison sites on what your likely to pay. 5 minute search can save you a lot of money.
It's a game that requires