OFT reports insurance industry

1 October 2012  

THE OFT has referred the UK’s private motor insurance market to the Competition Commission for further investigation amid concerns that the market is not working well for motorists.

A market study commissioned by the government department found that the insurers of drivers responsible for an accident appear to have little control over the way repairs and replacement vehicles are provided to the ‘not-at-fault’ driver. This may enable the insurers, brokers and bodyshops of not-at-fault drivers to charge disproportionate amounts – which is something the OFT wants the Competition Commission to look at.

Clive Maxwell, OFT Chief Executive, said: “Competition appears not to be working effectively in the private motor insurance market. The insurers of at-fault drivers appear to have little control over the bills they must pay, and this may be leading to higher costs for them and ultimately higher premiums for motorists.”

“Having publicly consulted on our provisional decision, we are still of the view that there is no quick fix to these problems, and that a more in-depth investigation by the Competition Commission is therefore appropriate.”

“The Competition Commission has up to two years to report its findings. If it finds that features of a market are harming competition, it has powers to impose remedies to address the situation.”