OFT chases after motor insurance industry with a big stick!

14 December 2011

an off-road car, yesterday

Office of Fair Trading is looking hard (really, really hard) at replacement vehicle, repair costs and referral fees following steep rise in premiums. That's right! The OFT is chasing the motor insurance industry with a broom handle and want to thwack it's behind!

The OFT has been collecting evidence thanks to continued rising prices, with some estimates putting the annual increase at 40%. They say that they're going to look at two areas in particular that they believe “restrict[s] and distort competition”.

The first area they want to investigate is the cost to insurers of third party claims for replacement vehicles and repairs. OFT think that insurers “appear to find it difficult to assess the extent to which the costs claimed are reasonable”. Secondly, they want to look at the practice of referral fees, with insurers, roadside assistance companies and garages all cited for selling off drivers’ details to claims management companies.

The Government have already announced a ban on referral fees in England and Wales, however, without thorough policing, there's a strong chance the whole thing won't work in practice. In addition to this, the OFT has asked for the help of the Financial Services Authority (FSA) to work with insurers to make insurance product information easier to understand.

The results of the OFT investigation are due in spring 2012.

TOPICS:   Travel   Motoring   Consumer Advice   Insurance   Economy


  • Businessman
    There is definitely Something Going On. Someone bashed my car, more than a dent but not really that bad still driveable. Insurer fell over themselves to take charge of everything, my car went to bodyshop, and I drove a brand new rental jag for *two months* until they fixed mine. I was happy cos I got lavish use of a nice car plus my own car fixed, somebody who owned that Jag was happy cos they leased it out at 150 a day for 2 months. Of course it all goes on muggins premium in the end though doesn't it. (Muggins being all of us reading this...)
  • klingelton
    last year my missus had a bash in her car. insurance company insisted it went to their approved garage in normanton, wakefield. off it went (with its little rucksack) and spend 2 weeks being repaired. (lower fishbone replaced) it came back and they hadn't bothered doing the tracking, so the car was crabbing all over the place. i sent it back for them to do the tracking immediately and another week later it came back. they provided a courtesy car for 2 weeks, but not for the third. fastforward to this year when a speeding copper on our side of the road caused us to take steps to avoid him, this lead to the person behind the person behind to cause the person behind to drive up our tail pipe. damage was nothing too bad - just the bumper and some bits underneath. This time, I took it to our guys and insisted to the insurance company they did it. 3 days later, the wife had her car back. it was done right the first time and only cost for the parts, labour and 3 days with a renta car. with the accident last year, we never saw a list of part that were replaced. this year, there was a full breakdown of how much it was going to be, including labour. everyone but the person obliged to pay insurance premiums makes from insurance. The whole thing is a legal scam.
  • Jonny N.
    I work for a prominent insurer in personal injury claims and the practice of false or exaggerated personal injury claims is the biggest reason for having to raise premiums. Most claims get settled before any medical evidence is even thought about being prepared due to the volume of these obviously faked injury claims, but, due to the medical professionals being paid £300+ per report, they'll say whatever the claimant and their solicitors wants them, forcing the insurer to pay one way or the other. Given the early offers are of £1300-£1750, usually, on top of the solicitors claiming £1600 plus other costs on top of that, you're looking at very minor shunts of around £1500 total vehicle damage costing upwards of £5000-6000 once both party's repairs, third party hire, injury and admin/solicitors costs are all accounted for. Most premiums won't have that entire amount lumped on a renewal, but imagine most claims involving those figures, maybe higher, and it's very easy to see why premiums are rocketing and solicitors and claims management companies are to blame.

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