The Pursuit Of Car Insurers Inflating Premiums May Just Have Broken the ‘Merry-Go-Round’
At last the steadily spiralling out of control hold over motorists by car insurers may have hit the bottom of the abyss.
The Office of Fair Trading has recorded that the average price of compulsory insurance cover for a vehicle at £1,100 per annum as the highest ever, which they refer to as a ‘dysfunctional’ market. Sadly it is such a large proportion of the UK’s car owners that the Competition Commission are saying is costing £225 million as a whole in extra premiums.
Something that has been in the offing for some time is to reverse the actions of government on the practice of referral fees. These are given to the injured party claimant insurers via car hire firms and garages in order to procure services in their direction, really tantamount to a ‘legal’ backhander. Garages and car hire firms then go onto recover the referral fee by upping the repair or temporary car hire costs. Also stretching the time the owners car is in the garage only increases a lucrative pay out to all, except the insured person. The extra costs for a replacement car for this purpose can be more than 30% than the normal hire charge.
This fee regime is being defined as like a ‘merry-go-round’, which affects 34 million car owners in Britain, whom have no choice but to pay the extortionate over inflated rate on premiums.
OFT are going to pass on a recommendation to the Competition Commission who have the ability to authorise changes in work practices, should they be deemed open to exploitation and administer heavy fines. This does seem the case overall with the high escalating cost of insurance paid by all car owners, regardless of a clean driving history.
This situation at present is aimed at those that have not caused incidents, so will the driver that caused the accident see his premiums dramatically rise, in order to recoup the loss of the insurers’ overinflated income from the innocent party? Or what about those involved in incidents with uninsured drivers?
In his position as Director of General Insurance with the Association of British Insurers, which he has held since 2005, Mr Nick Starling said ‘We hope that the work by the Competition Commission will bring much-needed reforms that in turn will result in lower car insurance premiums for consumers.’
Hopefully the intervention will go ahead as it is being unopposed by MPs, whom agreed that it is only going to cover one aspect of the way business is obtained via referral fees by insurance companies, solicitors and management consortiums.