With accusations spreading that inflated motor car insurance claims reportedly cost the industry £2 billion a year, the OFT is poised to investigate the matter, industry insiders recently said.
It has become harder to find discount car insurance quotes in the current economic landscape in the UK due to rocketing premiums, as many critics have blamed a combination of garages, car hire firms, ambulance-chasing lawyers, and others growing wealthy off massive fees as the culprits. The Office of Fair Trading has decided to take action based on these accusations, announcing it will investigate claims of inflated repair bills for damaged cars and extortionate prices to supply hire cars.
Car insurance rates have been rising steadily over the past two years, with some motorists experiencing increases of as much as 40 per cent to their premium prices. Some motorists, especially younger ones, have been priced off the road due to massive motoring costs, while others have allegedly been victimised by one of many new specialist claims firms who provide high-priced hire cars t drivers involved in accidents through no fault of their own.
These specialist firms purchase the personal details of policyholders who were involved in an accident by paying breakdown firms, insurance brokers, and insurers a ‘referral fee’ for the information, and many insurers also receive the fees from garages in order to guarantee repair work. The costs of these fees are then fed back into the system by the insurers of the motorist at fault in the accident, and are then distributed to all drivers through increased premium prices.
The study by the OFT is hoped to result in a reduction of costs to motorists in the future.