The Office of Fair Trading (OFT) says an increase in personal injury claims has led to the cost of motor cover rising.
The OFT has launched a "market study" into private motor insurance in the UK after a sustained period of rising insurance premiums. It will also look at the provision of third party vehicle repairs and credit hire replacement vehicles to claimants.
The evidence the OFT has gathered suggests that private motor insurance premiums paid in the UK rose by around 12pc between 2009 and 2010, and by a further 9pc in the first three quarters of 2011.
Yet this is in stark contrast to findings from the AA, which suggest that premiums have risen by as much as 40pc.
Responses received by the OFT indicated that a key factor in these increases has been a rise in the costs associated with personal injury claims. However, the increased cost of third party non-injury claims, which include credit hire replacement vehicles and third party vehicle repairs, are also factors which have had a notable impact.
As a result of this work, the OFT said it had “reasonable grounds” for suspecting that there are features of the UK's private motor insurance market that restrict and distort competition relating to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants.
Sonya Branch, OFT senior director of services, infrastructure and public markets, said: “Our call for evidence has enabled us to gather information swiftly and efficiently so that we can now focus on specific features of the market that we are concerned could be restricting or distorting competition.
“Our concerns relate to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants, where we suspect companies may be competing to extract money from each other rather than keeping premiums as low as possible and providing car owners with value for money.
"By carrying out a market study, we aim to clarify whether a market investigation reference to the Competition Commission is appropriate.”
by the telegraph
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