Drivers’ anger over rising insurance premiums has prompted an investigation by the Competition Commission after the Office of Fair Trading said the market was “dysfunctional”.
The OFT says artificially high car hire and repair charges add £225m a year to drivers’ premiums and it wants the commission to investigate the sector. It says some insurers connive with garages and suppliers of courtesy cars to let them charge inflated prices.
Responding to publication by the Office of Fair Trading of its market study examining the private motor insurance sector, Chair of the Transport Committee, Louise Ellman MP, said today,
“ I welcome this report which follows on directly from the work the Transport Committee started with our Autumn 2010 inquiry into the escalating cost of car insurance.*
“ The OFT’s provisional decision to refer the highly dysfunctional UK market in private motor insurance and related goods or services to the Competition Commission for full investigation is a major step forward.
“Like the OFT, we found evidence to support the view that various features of the private motor insurance market prevent, restrict or distort adequate competition in ways that do not deliver a fair deal to motorists.
◊ Britain’s leading car insurance broker has reached agreement with all insurers on its panel that AA customers won’t lose their no-claim discount or excess following a crash involving an uninsured driver.
It’s believed that the AA is the first major broker to offer an‘uninsured driver promise’, regardless of the cost of damage or personal injury compensation to customers. This announcement comes at a time when crashes involving uninsured drivers are costing the insurance industry around £380 million per year.
Do you have a car leasing question?