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Car insurance premiums to be investigated by the Office of Fair Trading

Car insurance premiums to be investigated by the Office of Fair Trading

The Office of Fair Trading (OFT) has revealed plans to investigate car insurance premiums after drivers in the UK were hit with yet another price hike in the average cost of an annual car insurance policy this year. Following two successive of rises in car insurance premiums, in which an increase of 12% was calculated between 2009 and 2010 and a jump of 9% reported over just 9 months of this year believed to be linked to replacement car costs, the OFT have announced they plan to look into the rising cost of cover. In recent years the OFT identified personal injury claims as one of the main causes for huge hikes in the cost of insurance, however more recently the regulatory body has highlighted credit hire replacement cars and third party vehicle repairs as two areas which it believes may be having an impact on the rising cost of car insurance premiums. The credit hire companies offer a replacement car to the drive that was not at fault in the accident to use while their car is being repaired. This is being offered to the driver, regardless of whether they had a replacement car feature on their policy or not as the cost of the hire car is then passed onto the insurance company of the driver at blame, driving up the cost of a claim further. The impact of these more costly claims is then being felt by motorists in the form of more expensive premiums. The OFT is continuing to probe this issue and will have concluded its enquiry by early next year.

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