With the Office of Fair Trading finally coming out and saying what we’ve all been going on about for months now – that the motor car insurance industry is completely ‘dysfunctional’ the Competition Commission is set to launch a new study to determine the extent of responsibility that the nation’s car insurance companies bear.
While the amount artificially high repair and car hire charges add to motorists’ car insurance rates – £225 million – pales in comparison to the £2 billion in costs whiplash claims add every year, the figure is still high enough to warrant investigation, the OFT says. The watchdog has its suspicions that some insurance companies could be in cahoots with courtesy card suppliers and garages in order to ramp up the prices they charge to customers..
The OFT’s chief executive, John Fingleton, said that the Competition Commission needs to investigate the matter in detail, as there’s no slapping a sticking plaster over the problem. The Association of British Insurers’ chief, Nick Starling, echoed the OFT’s sentiments, making it a point to note that motorists were having to soak up these costs left and right.
Mr Starling stated that insurers have had to pass on inflated costs to their customers for far too long due to exorbitant credit hire car rates. These costs naturally lead to premium increases, as insurers seek to recover their outgoing the only way they can – from their customers – and those disreputable few who have taken advantage of the out-of-control nature of the system need to be reined in as soon as possible.