OFT launches investigation into car insurance claims
Wednesday, 14 December 2011 10:08
The Office of Fair Trading (OFT) has launched an investigation into private motor insurance in the UK after a series of price hikes for cover recently.
It said that motor insurance premiums increased by 12 per cent from 2009 to 2010, as well as by a further nine per cent in the first nine months of 2011.
The organisation believes this is partly due to a rise in the number of personal injury claims made by drivers, but also because of the increased cost of third party non-injury claims such as courtesy cars and vehicle repairs.
A statement issued by the OFT today (December 14th 2011) says it suspects that parts of the private motor insurance market are restricting and distorting competition by generating revenues through referral fees and inflating the costs that insurers have to meet.
This could be pushing up premiums significantly.
The OFT also said it has concerns about legal protection cover being sold to car owners.
Spokesperson Sonya Branch said: "By carrying out a market study, we aim to clarify whether a market investigation reference to the Competition Commission is appropriate."
Next year, women could see their car insurance costs rise by 11 per cent after a European ruling comes into force which bans firms from basing prices on gender, according to the GDV.
Meanwhile, Oxera claims that young men should see their premiums go down.
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