OFT to launch full car insurance probe - Car Rental News
OFT to launch full car insurance probe
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Car Rental News - 04/06/2012
Car insurers are facing a full probe into practices that critics say have pushed up premiums by £225 million per year.
Car insurers are facing a full probe into practices that critics say have pushed up premiums by £225 million per year.
Officials from the Office of Fair Trading (OFT) said on Friday that it was planning to refer the matter of "dysfunctional" practices in the car insurance industry to the Competition Commission. The agency said the move comes in light of evidence showing that the cost of repairs and replacement car rentals had been pushed to artificial highs.
According to the OFT, most motorists are now “powerless” regarding the method in which repairs and replacement car hire are carried out, leaving the industry to inflate prices dramatically. Officials said that this pushes the average cost of replacement car hire to £560 per incident, whilst repairs typically cost at least £155.
Consumer watchdogs quickly hailed the announcement. Richard Lloyd, executive director for Which? said that the OFT has discovered a pattern of deceit and that consumers need greater transparency and strengthened pressure on insurers in the effort of reducing premium rates.
The OFT is due to issue its final decision regarding the issue by October following the completion of an upcoming consultation. If the issued is handed to the Competition Commission, the agency could utilise its power to restructure the industry and to require insurers to meet special requirements.
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