The UK Government sponsored watchdog the Office of Fair Trading (OFT) is finally going to investigate the way car insurance is sold in the UK and in particular if and why premiums have risen by a purported 40% this past year.
The investigation comes after numerous outcrys, complaints and campaigns from the British media including the BBC and consumer advice organisations such as Which.
The OFT today issued the following press release:
OFT issues call for evidence on motor insurance
08 September 2011
The OFT today issued a call for evidence to establish the background to recent reports of rising UK private motor insurance premiums, and consider whether further work may be necessary to improve the way the market works.
UK annual comprehensive car insurance premiums are reported to have risen by as much as 40 per cent in the year ending 31 March 2011.
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.
As part of its work the OFT is interested in examining reports that car insurance premiums in Northern Ireland are significantly higher than they are in the rest of the UK, and understanding the reasons for any difference.
The OFT is asking insurers and others for their views on a number of aspects of the private motor insurance market that may raise competition or consumer issues, including:
- the role of price comparison sites
- the provision of credit hire replacement vehicles to drivers who are involved in accidents that are not their fault
- insurance companies’ use of panels of approved repairers, and
- ancillary products that are sold by insurance companies in addition to standard motor insurance cover.
The OFT will continue to work with the Ministry of Justice, the Financial Services Authority and other government departments regarding its work. It will gather evidence from a number of interested parties over the next five weeks, and plans to publish its findings in December 2011. Whether the OFT conducts further work in this area will depend on the evidence received.
- According to the AA’s British Insurance Premium Index, the ‘shoparound average’ for annual comprehensive car insurance cover rose by 40.1% for the 12 months ending 31 March 2011.
- On 31 August 2011, the Consumer Council for Northern Ireland launched a campaign to reduce the cost of car insurance in Northern Ireland. This included making a formal submission to the OFT to ask
Have The OFT Already Missed the Point?
Sadly the OFT seem to be ignoring what they majority of people in the business seem to think are the reasons for higher premiums and that is Whiplash accident claims farming and the lack of profitable claims reserves earning little interest.