For once, vehicle insurers, rather than personal injury solicitors, are getting the blame for rising insurance premiums. The UK Office of Fair Trading is in the process of referring the car insurance industry to the Competition Commission as it is concerned that restrictions in competition are causing a rise in premiums.
An investigation into the business of car insurance is to be undertaken by the Competition Commission as there is concern that car owners are not getting the best deals.
Back in May, the Office of Fair Trading (OFT) announced that it had fair grounds to believe that a few car insurers are behaving in a manner that stops, restricts or interferes with competition in the vehicle insurance market.
The OFT is mainly concerned that when an accident has occurred and the insurer of the driver who is at fault does not have a lot of control over how repairs and substitute vehicles are offered to the driver who was not at fault. Therefore, insurers for the driver who is not at fault, credit-hire businesses and vehicle repairers have had the capacity to take on practices that exaggerate their costs to a rate higher than they would normally be.
In the end, this results in higher premiums for drivers. Highlighted in the OFT’s report, published in May, poorly regulated competition could be elevating premiums for motorists by £225 million annually.
The Competition Commission has been given 2 years to make a report on what it has discovered. In the likelihood of it finding any aspects of a market that are damaging competition, it has the powers to introduce solutions that will sort out the situation.
The claims director of Aviva, which is Britain’s biggest insurer, Dominic Clayden, is pleased about the OFT’s decision as it will inevitably be a good way to eliminate the mountainous costs that have apparently driven up premiums to an unacceptable level.