The Office of Fair Trading announced this past Thursday that it will be launching an investigation into rising car insurance rates.
The cost of motor car insurance has been rising at a startling rate over the past 12 months and more. Some policyholders, still reeling from 2010’s 30 per cent rate hike, have seen their formerly discount car insurance quotes rise as much as 40 per cent this year, according to an insurance premium index released by the AA.
In light of these rampant increases, the OFT has set itself for an examination of the reasons behind the phenomenon, with the consumer watchdog especially interested in issues of consumers or competition. On the look out for evidence of over-pricing, the OFT will gather data and then publish its research findings before the end of the year, industry experts report.
Motorists across the UK will welcome the industry watchdog’s probe. However, beleaguered drivers do have some more good news to rejoice, as the government announced this past Friday it would institute a ban to referral fees insurers charge to claims management firms and lawyers for passing on personal details of policyholders involved in car accidents.
Insurers have repeatedly blamed referral fee payments as one of the key factors that have pushed insurance rates upwards in recent years. Called the industry’s ‘dirty little secret’ by experts, the practice of selling the details of a given customer to personal injury solicitors is thought to have a direct correlation to the rising number of car accident personal injury claims brought against insurance companies, as injured drivers are inundated by text messages and phone calls from claims management firms and personal injury lawyers.