The car insurance market has been labelled “dysfunctional” by the Office of Fair Trading this week.
An estimated £225m is added to UK motorists’ insurance premiums by inflated replacement car hire and repair costs, it said.
With no quick fix available, a more comprehensive study has been commissioned into the cause of high premiums.
John Fingleton, chief executive of the OFT, said “Competition in this market does not appear to work well for drivers.”
Nick Starling from the ABI agreed, suggesting that drivers were carrying the burden of higher prices. “For too long insurers and people paying premiums have faced inflated rates for credit hire cars and excessive hire periods, which have led to higher premiums,” he said.
It’s difficult to talk about rising the cost of car insurance without mentioning referral fees – it is suggested that collusion between insurers and replacement vehicle providers means that an average of £560 extra is charged to the at-fault party in an accident.
We hope to see findings that help bring changes and apply downward pressure to car insurance prices for consumers across the UK. In the mean time, check out the insightful video and interesting comment thread over at the BBC.