The motor insurance coverage market is officially under investigation by the competition compensation (CC). The office of fair Trading (OfT) warned that it may refer its situation to the CC back in may if, after a public consultation, it still suspected there were features of the market that “prevent, restrict or distort competition”. four months later, the OfT has now verified that it does.
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Clive Maxwell, OFT chief Executive, said: “Competition appears not to be working effectively in the personal motor insurance coverage market. The insurers of at-fault drivers appear to have bit manage over the expenses they must pay, as well as this may be leading to higher costs for them as well as eventually higher premiums for motorists.
“Having publicly consulted on our provisional decision, we are still of the view that there is no quick repair to these problems, as well as that a more in-depth investigation by the competition compensation is therefore appropriate.”
In its original market study, the OfT wrapped up that motorists were paying as much as £225million more in premiums than they needed to – adding an typical £10 per year to the expense of insuring a car.
But it was the expense of hiring courtesy cars and trucks that creating the most shocking findings. The OfT declared it was, on average, £560 more costly to hire a courtesy cars and truck for a not-at-fault driver than necessary. Plus, repairs were an typical £155 dearer than they needed to be.
The association of British Insurers stated it welcomed today’s statement that the CC would now investigate the industry. Its director of general Insurance, Nick Staling, said: “The OfT discovered what insurers have understood for many years – that when a client has a accident that is their fault, the insurer has bit manage over the expense of the subsequent claim. In particular, for as well long insurers have dealt with inflated rates for credit history hire cars and trucks as well as extreme hire periods which have led to higher insurance coverage premiums for customers.
“Regulation of all players in the market to deal with extreme costs is needed, as well as we look ahead to working with the competition compensation to bring much needed reforms to the market that will, in turn, result in lower cars and truck insurance coverage premiums for consumers.”