The Office of Fair Trading (OFT) has taken steps to intervene in the UK car insurance market to establish reasons for rising car insurance premiums.
The OFT today (8 September 2011), called for evidence to establish the background to recent reports rising car insurance costs to consider whether more work is necessary to improve the way the insurance market functions.
Car insurance premiums have risen by around 40.1 per cent in the year ending 31 March 2011 according to the Confused.com/Towers Watson car insurance price index. A similar price index ran by the AA found similar increases.
The OFT now wants to unveil the full facts behind the increases as well as any issues that need to be addressed to improve the market. In particular, the OFT is looking at:
- insurance companies’ use of panels of approved repairers
- ancillary products that are sold in addition to standard car insurance cover
- the provision of replacement vehicles to drivers who are involved in accidents that are not their fault
Commenting on this announcement, Otto Thoresen, the director general of the Association of British Insurers (ABI), said: “Insurers are acutely aware of the impact that higher motor insurance premiums have for their customers. This is why the industry is doing everything possible to reduce costs, for example by campaigning for compensation reform to tackle excessive legal costs and frivolous claims, and setting up the insurance fraud register to further reduce fraud.
“This inquiry gives the industry another opportunity to highlight the cost pressures motor insurers are facing, what action is needed to reduce them, and steps the industry is taking to ensure customers get the best deal when buying motor insurance.”
The OFT will gather evidence over the next five weeks, and plans to publishing its findings in December 2011. Any further action will be dependent on the results of the investigation.
To see how car insurance premiums have risen in your area, check out our interactive infographic
