Menu
14/12/2011
Study To Probe Motor Insurance Premium Surge
The Office of Fair Trading (OFT) has launched a market study into private motor insurance in the UK, to investigate recent increases in private motor insurance premiums associated with third party repairs.
The OFT said that private motor insurance premiums paid in the UK rose by around 12% between 2009 and 2010, and by a further 9% in the first three quarters of 2011.
A key factor in the increases had been attributed to a rise in personal injury claim costs by the industry, however, the OFT said an increase in the cost of third party non-injury claims, which include credit hire replacement vehicles and third party vehicle repairs, were also factors which have had a "notable impact".
The OFT said it had "reasonable grounds" for suspecting there were features of the UK's private motor insurance market that restrict and distort competition relating to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants.
Sonya Branch, OFT Senior Director of Services, said: "Our concerns relate to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants, where we suspect companies may be competing to extract money from each other rather than keeping premiums as low as possible and providing car owners with value for money.
"By carrying out a market study, we aim to clarify whether a market investigation reference to the Competition Commission is appropriate."
The OFT say private motor insurers responsible for meeting third party claims for credit hire replacement vehicles and vehicle repairs appear to have only limited control over the choice of provider and appear to find it difficult to assess the extent to which the costs claimed are reasonable.
That means rival private motor insurers, brokers and credit hire providers have the opportunity, and the incentive, to carry out practices which allow them to generate revenues through referral fees, while simultaneously inflating the costs that the third party insurer has to meet.
This in turn may contribute to car owners having to pay higher premiums.
The OFT said it also has concerns about the provision of motor legal protection cover to car owners and has called on the Financial Services Authority to work with private motor insurers, as soon as possible, to ensure car owners have access to appropriate information when purchasing such cover.
The OFT added it was concerned about the complexity of the product offering, and that the way it is being sold may make it difficult for car owners to assess the product's value for money.
(DW)
The OFT said that private motor insurance premiums paid in the UK rose by around 12% between 2009 and 2010, and by a further 9% in the first three quarters of 2011.
A key factor in the increases had been attributed to a rise in personal injury claim costs by the industry, however, the OFT said an increase in the cost of third party non-injury claims, which include credit hire replacement vehicles and third party vehicle repairs, were also factors which have had a "notable impact".
The OFT said it had "reasonable grounds" for suspecting there were features of the UK's private motor insurance market that restrict and distort competition relating to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants.
Sonya Branch, OFT Senior Director of Services, said: "Our concerns relate to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants, where we suspect companies may be competing to extract money from each other rather than keeping premiums as low as possible and providing car owners with value for money.
"By carrying out a market study, we aim to clarify whether a market investigation reference to the Competition Commission is appropriate."
The OFT say private motor insurers responsible for meeting third party claims for credit hire replacement vehicles and vehicle repairs appear to have only limited control over the choice of provider and appear to find it difficult to assess the extent to which the costs claimed are reasonable.
That means rival private motor insurers, brokers and credit hire providers have the opportunity, and the incentive, to carry out practices which allow them to generate revenues through referral fees, while simultaneously inflating the costs that the third party insurer has to meet.
This in turn may contribute to car owners having to pay higher premiums.
The OFT said it also has concerns about the provision of motor legal protection cover to car owners and has called on the Financial Services Authority to work with private motor insurers, as soon as possible, to ensure car owners have access to appropriate information when purchasing such cover.
The OFT added it was concerned about the complexity of the product offering, and that the way it is being sold may make it difficult for car owners to assess the product's value for money.
(DW)
Related UK National News Stories
Click here for the latest headlines.
31 May 2012
Motor Insurance Market Referred To Competition Commission
The OFT has provisionally decided to refer the private motor insurance market to the Competition Commission after it found evidence that insurers compete in a dysfunctional way that may push up premiums for drivers by £225 million a year.
Motor Insurance Market Referred To Competition Commission
The OFT has provisionally decided to refer the private motor insurance market to the Competition Commission after it found evidence that insurers compete in a dysfunctional way that may push up premiums for drivers by £225 million a year.
27 May 2009
Garages Urged To Sign Up To Service And Repair Code
Independent garages are being urged to show their commitment to a fair deal for consumers by subscribing to a code of practice on service and repair.
Garages Urged To Sign Up To Service And Repair Code
Independent garages are being urged to show their commitment to a fair deal for consumers by subscribing to a code of practice on service and repair.
17 December 2013
Competition Commission Criticises Motor Insurance Industry
The Competition Commission has made a number of recommended revisions to the motor insurance industry following a year long review at the request of the Office of Fair Trading (OFT). The commission described premiums as "unnecessarily high" for all drivers due to the complex chain of claims, blaming the cost of courtesy cars and repairs.
Competition Commission Criticises Motor Insurance Industry
The Competition Commission has made a number of recommended revisions to the motor insurance industry following a year long review at the request of the Office of Fair Trading (OFT). The commission described premiums as "unnecessarily high" for all drivers due to the complex chain of claims, blaming the cost of courtesy cars and repairs.
15 December 2006
Government issues Christmas mini moto warning
The government is urging parent considering buying a mini motorbike for their child for Christmas to stop and think before they buy. The Department for Transport and Auto Cycle Union have both called on parents to consider the consequences of what might appear to be exciting presents, but which can be a bigger danger than expected.
Government issues Christmas mini moto warning
The government is urging parent considering buying a mini motorbike for their child for Christmas to stop and think before they buy. The Department for Transport and Auto Cycle Union have both called on parents to consider the consequences of what might appear to be exciting presents, but which can be a bigger danger than expected.
16 November 2011
Doctors Call For Ban On Smoking In Cars
The British Medical Association is calling for a total ban on smoking in cars, saying there is "compelling" medical evidence and asking the Government to take a "bold" and "courageous" step.
Doctors Call For Ban On Smoking In Cars
The British Medical Association is calling for a total ban on smoking in cars, saying there is "compelling" medical evidence and asking the Government to take a "bold" and "courageous" step.
-
Northern Ireland WeatherToday:A showery start with outbreaks most frequent north of Lough Neagh and through the morning, before dwindling during the afternoon as the northwest breezes ease and brighter spells of weak sunshine prosper. Maximum temperature 8 °C.Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
