After new evidence emerged that some motorists have seen car insurance rates increase by as much as 40 per cent in the past 12 months, the Office of Fair Trading has announced it will be launching an inquiry into the rising costs of motor car insurance.
The OFT has begun to gather evidence in regards to the role car insurance comparison sites have played in the rate hikes. However, insurers and motoring organisations alike have partly laid the blame at the feet of ‘ambulance chasing’ personal injury law firms in search those who have been involved in a road traffic accident.
In support of these claims, the AA found that premium prices were less expensive across the Border, as the legal system in Scotland makes it more difficult for those types of injury law firms to conduct business. The OFT said that it will peruse all evidence that it collects in order to examine the discount car insurance market, which could lead to a more exhaustive inquiry if competition or consumer issues are discovered.
The OFT also said that, in addition to its examination of car insurance comparison sites, it has also found evidence of possible consumer or competition problems within the motor insurance market. The Office said in a statement that insurance premiums have been reported to have undergone as much as a 40 per cent increase in the 12 months preceding March of this year, and therefore feels the need to establish the full facts, which include the reasoning behind any rate hikes.
The OFT also remarked it had interest in discovering the reason behind Northern Ireland’s insurance premium prices are substantially higher than they are in the remainder of the UK.