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Andrew Daniel

Andrew leads our Operational Team and is our expert when it comes to all the ins and outs of car hire excess insurance.

Car Insurance Market to the Competition Commission by OFT

Car insurance market dysfunctional with insurers increasing costs of claims by taking referral fees from accident management companies.

But don't expect this to be passed on to you via lower car insurance premiums any time soon. The Office of Fair Trading began investigating the car insurance market in September 2011. The Competition Commission now have until 27th September 2014 to produce it's final report.

The OFT believe there are features of the car insurance market that prevent, restrict or distort competition.

Specifically, the features under investigation are the provision of replacement vehicles and vehicle repairs for the not-at-fault driver, paid for by the at-fault drivers insurance.

In a similar move to the personal injuries claims, the insurers of the not-at-fault driver have been referring cases to accident management companies. Typical fees paid to the insurance company are between £250 and £400 per hire car. The accident management and credit hire companies then supply replacement cars at over market rates and repairs take longer and cost more than necessary, driving costs higher. It is estimated that the cost of providing replacement vehicles is inflated by an average of £560 per claim with repairs costing £155 more.

Honest John, Motoring Correspondent for the Telegraph has been raising the issue years before OFT investigation – see prophet warning from September 2008.

Nick Starling, director of general insurance for the Association of British Insurers welcomed the referral describing the car insurance market as dysfunctional.

Despite this, car insurance premiums have been falling in the last 12 months. Kevin Pratt from Moneysupermarket.com saying that premiums were down by 10.6% compared with this time last year.

If you aren't seeing a reduction in your car insurance premium, you should compare car insurance to get the best deal available.