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Industry watchdog says car insurance premiums are too high

According to industry watchdog the Competition Commission, high car insurance premiums need to be reduced through “far reaching reforms”.

It has been noted that the unnecessarily high premiums are a result of the cost of replacement cars and repairs by the liable motorists’ insurers. Through these costs, the overall price of insurance premiums is on the increase and many motorists are feeling the brunt of the excessive cost of being on the road.

The Competition Commission found that when the at-fault insurer takes care of the other driver’s bill for a damaged or written off vehicle, “this separation of control and liability creates a chain of interactions which result in higher costs for replacement cars and for repairs being passed on to at-fault insurers.

“It is estimated that the extra premium costs are between £150m and £200m a year.

“There is insufficient incentive for insurers to keep costs down even though they are themselves on the receiving end of the problem.”

As a result of a referral from the Office of Fair Trading, the Competition Commission has been studying the industry for over a year. A new report is due to be published in 2014 where the Competition Commission will consider ways to rectify prevalent issues in the current market.

According to James Dalton, spokesperson for the Association of British Insurers: “As an industry we remain absolutely committed to improving the car insurance market for hard-pressed motorists.

“We ask for the Commission’s inquiry into the market to help insurers continue the work we are already undertaking to remove costs that unnecessarily drive up car insurance premiums.

“We look forward to continuing to engage with the Competition Commission as it carries forward its work and we hope that this will lead to further improvements in the market and lower premiums for customers”.

The Association of British Insurers has said that the report is “a further step along the road to getting a market that enables insurers to deliver fully for consumers”.




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