After the Office of Fair Trading announced it was going to investigate fuel prices at the start of September, everyone was happy that they had finally made a move. Now it has announced an investigation into another area of the motor industry that many people are unhappy with – car insurance.
With many motorists experiencing extortionate costs and rising prices, the OFT has referred the industry to the Competition Commission with concerns that “the market is not working well for motorists”. This is after a study suggested there are features of the market that “prevent, restrict or distort competition”.
Clive Maxwell, the Chief Executive of the Office of Fair Trading, said: “Competition appears not to be working effectively in the private motor insurance market. The insurers of at-fault drivers appear to have little control over the bills they must pay and this may be leading to higher costs for them and ultimately higher premiums for motorists.”
This may lead to insurers of not-at-fault drivers being able to engage in practices which appear to result in the costs for not-at-fault drivers (such as replacement cars and repairs) being higher than they might be.
This is quite a complicated case and the Competition Commission has two years to report its findings, after which it can make suggestions. As always, stay tuned to the Launch blog to hear the latest news.