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Car insurance premiums to be probed by OFT

Car insurance premiums to be probed by OFT

Category: Car insurance

Updated: 26/11/2012
First Published: 08/09/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Office of Fair Trading (OFT) has revealed that it is to investigate the rising costs of insuring a car in the UK .

Recent figures from AA showed that annual comprehensive car insurance premiums have risen by as much as 40%, and the regulator is keen to find out why.

The OFT has said that it wants to establish the full facts about the rises, the reasons behind the increases and any consumer issues that need to be addressed.

It will also look at whether there are any changes that can be made to competition to improve the car insurance market.

As part of the probe, the OFT is asking insurers and others for views on the market, including the role played by comparison sites, other products that are sold on top of insurance premiums and the provision of replacement cars after accidents.

It is also interested in looking into reports that car insurance premiums are markedly higher in Northern Ireland .

Reacting to the announcement, the Association of British Insurers (ABI) said it will give the insurance industry the chance to highlight the cost pressures it is facing.

"Rising claims costs from personal injury claims and excessive legal costs, insurance fraud and uninsured driving, coupled with lower investment returns in recent years, have unfortunately led to rising motor insurance bills for many customers," said Otto Thorensen, director general of the ABI.

"In fact the motor insurance industry has not been profitable for the last 16 years."

The OFT plans to publish its findings in December later this year, and will conduct further work on car insurance costs depending on the evidence it receives.

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