Compare Car Insurance? Not if the UK Government gets its way!

The way that car insurance is sold to the UK public is to come under close scrutiny in a new investigation announced today by the UK Government consumer watchdog the OFT (Office of Fair Trading) and it looks like car insurance comparison websites are in the firing line!

UK Car Insurance To Be Investigated By Consumer Watchdog The OFT

The UK Government sponsored watchdog the Office of Fair Trading (OFT) is finally going to investigate the way car insurance is sold in the UK and in particular if and why rates and premiums have risen by 40% this past year.

The watchdog’s investigation comes after numerous outcrys, complaints and campaigns from the British media including the BBC and consumer advice organisations such as Which.

The OFT today issued the following press release:

UK annual comprehensive car insurance premiums are reported to have risen by as much as 40 per cent in 2010-11 and the OFT is interested in gathering market participants’ views on:

• whether the reported increase in private motor insurance premiums is accurate
• the factors that are responsible for contributing to any increase in premiums, and
• whether there is work that the OFT or other parties could be doing to improve the way that the market is currently functioning.

The OFT is interested in examining reports that car insurance premiums in Northern Ireland are significantly higher than they are in the rest of the UK and understanding the reasons for any difference.

We have identified a number of aspects of the private motor insurance market that may raise competition or consumer issues:

• the role of price comparison websites
• the provision of credit hire replacement vehicles to drivers who are involved in accidents that are not their fault
• insurance companies’ use of panels of approved repairers, and
• ancillary products (such as motor legal protection) that are sold by insurance companies in addition to standard motor insurance cover.

The Financial Services Authority (FSA) has raised concerns about the fair treatment of consumers who buy insurance on price comparison websites and is currently consulting on proposed guidance for businesses that operate these websites.

The cost of personal injury claims, another potential contributory factor to rising private motor insurance premiums, is currently being considered by the Government.  We have therefore agreed with Ministry of Justice that this aspect of the market should not be a focus of our evidence gathering.

We have already co-ordinated, and will continue to work, with both the Government and the FSA over the course of this work.