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Claims Repairs Market Is Distorted Say’s The Office Of Fair Trading

As part of the UK Government’s investigation into the rising cost of car insurance, The Office of Fair Trading was asked a year ago to look at the practices employed by the Industry.
It has recently concluded that the cost of claims, largely blamed for higher premiums, involves certain unfair practices within the market following an accident. In particular the cost of approved repairs and replacement hire car charges that are claimed by the not at fault driver against the insurer of the car that was at fault.
The OFT has decided that unfair trading practices are so widespread that it has referred the matter to the Competition Commission which now has a further two years to look at the matter and produce a report.

In it’s referral decision the OFT has stated that there are reasonable grounds for suspecting that there are features of the market that prevent, restrict or distort competition in the provison of after the event goods or services.
“The OFT noted conduct of undertakings providing services relating to private motor insurance may have an impact on competition in the private motor insurance market, including the conduct of:
• credit hire organizations, repairers and other businesses providing services to drivers that have been involved in a road traffic accident
• businesses that manage the provision of these services to drivers that have been involved in a road traffic accident (such as accident management companies), and
• businesses that are involved in providing specific goods or services that are used by these providers and those that refer work to these providers.”

Whilst Car-Insurance.tv welcomes any measures that will help reduce the cost of car insurance premiums, we also note the difficulty that drivers face when trying to recover so called ‘uninsured losses’ such as obtaining a replacement vehicle following an accident.
As most of these disputes tend to end up in court, perhaps the OFT should also have referred solicitors as well as claims management companies to the Competition Commission, who more than often charge outrageous fees for a few hours of input.
Replacement vehicles and damage repairs are inevitable following an accident, however legal expenses should not be necessary!
We are also dismayed that after spending hundreds of thousands of pounds of the taxpayers money that the OFT has decided to pass the buck and delay the process of reducing the costs of car insurance by a further two years. Like most of these Government quangos they simply provide ‘jobs for the boys’ and in reality are just toothless paper tigers.
The full report can be read at http://www.oft.gov.uk/OFTwork/markets-work/motor-insurance/

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