Car insurance premiums are too high and should be reduced through far-reaching reforms, the competition watchdog said today.
The Competition Commission (CC) believes that too many drivers are footing the bill for unnecessary costs incurred during the claims process following an accident.
These costs are initially borne by the insurers of at-fault drivers, but they feed through into increased insurance premiums for all drivers. The CC said this “separation of control and liability” pushes up premiums by between £150 million and £200m a year.
The watchdog is also concerned about the relationship between price comparison websites and insurers.
CC deputy chairman Alasdair Smith, who is leading the investigation, said: “We are now considering a range of possible measures, some of them far-reaching reforms, to ensure that the market better serves the interests of customers.”
Some of the remedies being considered by the CC to improve competition include caps on the costs of repairs and providing a replacement vehicle, along with compulsory audits of repair quality and giving drivers more information about their rights in the event of an accident.
The CC expects to publish its final report in September.