Cheaper car insurance could be on the way as a consumer champion launches an investigation in to the cost of cover
Figures from The AA showing the cost of insurance to drivers has rocketed by up to 40 per cent in just 12 months has provoked the move from the Office of Fair trading (OFT).
The OFT is looking at whether the price of car insurance is unfair for motorists and whether any action is needed against insurers.
The OFT is calling for insurers and motorists to tell them about a number of car insurance topics, including:
- The role car insurance comparison sites play in the market
- Referral fees and claims management firms
- Whether the cost of insurer-approved repairers are fair
- Add-on products sold by insurers
“The OFT wants to establish the full facts, the reasons behind any increase, and whether there are any consumer or competition issues that need to be addressed to improve the functioning of the market,” said a spokesman.
The chance to provide evidence to the OFT inquiry team is open for five weeks.
Findings will be published in December – including a ruling on whether any further inquiries are expected.
Otto Thoresen, director general of the Association of British Insurers, said: “This will give 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.
“Rising claims costs from personal injury claims and excessive legal costs, insurance fraud and uninsured driving, coupled with lower investment returns in recent years, have unfortunately led to rising motor insurance bills for many customers. The motor insurance industry has not been profitable for the last sixteen years.”
Thoresen explained car insurers were taking steps to cut the cost of car insurance.
“Insurers are acutely aware of the impact that higher motor insurance premiums have for their customers,” he said. “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 reducing fraud.”