Car insurance news
21/12/2011
Car insurance companies are to be investigated by the OFT
The Office of Fair Trading (OFT) has voiced concerns that car insurance companies are using accidents as a way to extract money from each other as opposed to competing against one another to keep the cost of premiums low.
This is not the only investigation under way as the Ministry of Justice is also looking into how personal injury claims can impact the cost of insurance.
The OFT also mirrors the Government's concern that insurance for car payments are being inflated by the accident management industry.
The claims industry is believed to leave motor insurers paying too much for car repairs and replacement parts as well as having to pay the bill for referral fees.
On announcing the investigation, the OFT said that there are reasonable grounds for suspicion that the vehicle repair sector and replacement car market have been distorted.
The Director of General Insurance at ABI said that he was pleased that the OFT is examining unnecessary costs in the system, and other inefficiencies which need to be addressed, such as problems ranging from paying too much for car insurance and personal injury claims to credit hire and car repair.