OFT car cover inquiry launched - Car Rental News
OFT car cover inquiry launched
Car Rental News - 15/12/2011
The Office of Fair Trading has begun investigating the source of soaring car insurance premium rates.
OFT officials said that the investigation is underway after it had found that premiums for the £10 billion UK car cover industry had jumped more than 20 per cent in just 24 months. The watchdog says this is “reasonable grounds” to suspect that repair companies and replacement car hire firms have restricted competition, which has led to higher premiums for consumers.
The agency said that it insurance providers have recently reported that assessing the validity of claims made by third-party car hire and repair garages was becoming increasingly difficult.
The jump in car cover costs has also been attributed to referral fees in which insurance companies are paid for handing the details of accident victims to third parties. However, ministers have moved to put an end to the practice and thus the OFT said it would not be further investigating the matter.
The investigation is set to be completed by the spring, according to agency officials, who also said that the OFT will look into the possibility that insurance firms may not be providing customers with ample information regarding “complex” legal protection products as well as the effect of comparison websites’ “guaranteed” prices on competition.