Competition Commission says car insurance premiums are too high
Not only that, post-accident repairs are often shoddy and concerns have been raised about how hard it is for drivers to spot the best value products.
The Commission has been studying the insurance market for over a year, following up a referral from the Office of Fair Trading and they agreed with the OFT that the system was not working well for motorists, stating that premiums were being hiked up because the insurer of an innocent driver in an accident sorts out the replacement car or repair, but the at-fault driver's insurer pays the bill.
"This separation of control and liability creates a chain of interactions which result in higher costs for replacement cars and for repairs being passed on to at-fault insurers," it said. "The Commission estimates the extra premium costs to be between £150m and £200m a year. There is insufficient incentive for insurers to keep costs down even though they are themselves on the receiving end of the problem."
The Commission will now have to come up with ways to sort the market out and submit their final recommendations by September 2014.
They areas they'll be looking at is capping the cost of replacement vehicles, making the at-fault driver's insurer manage claims, making the not-at-fault driver responsible for providing a replacement vehicle and addressing the volume of sub-standard repairs following accidents.
"[These] possible remedies are a further step along the road to getting a market that enables insurers to deliver fully for consumers," said James Dalton, of the Association of British Insurers (ABI). "We look forward to continuing to engage with the Competition Commission as it carries forward its work and we hope that this will lead to further improvements in the market and lower premiums for customers."