The Office of Fair Trading (OfT) has recently launched an investigation into UK motor insurance and why they seem to be continuously rising.
They are without a doubt rising, which is reflected in Confused.com’s figures that suggest in some areas of the UK, insurance premiums have grown as much as 28 per cent in the last 12 months.
The OfT has been collected enough evidence (complaints and premium figures) to insinuate that certain factors of insurance costs are going up.
But why is insurance going up in the UK?
One of the reasons insurance and premiums are going up is because of people who purposely get into accidents or stage them and then put in injury claims.
This is a very popular ‘insurance scam’ amongst some people and is becoming more and more popular, which is reflected in the fact that it has gone up 21 per cent between 2009 and 2011.
Basically, the more people who put in injury claims, even if they are fake, the more insurance and premium costs go up.
Referral fees are also part of this problem as insurance companies are passing on accident details to third parties (solicitors) for a fee and therefore people are being advised by their solicitors to put in a claim, which again means more claims – higher premiums.
However, the OfT are not investigating referral claims and are focussing more on cost of repairs and replacement cars.
In an official statement, the OfT said: “Private motor insurers responsible for meeting third party claims for credit hire replacement vehicles and/or vehicle repairs appear to have only limited control over the choice of provider and appear to find it difficult to assess the extent to which the costs claimed are reasonable.”
The OfT will be working with the Financial Services Authority and insurance companies in this investigation.
The OfT will be completing a survey early in 2012 which may allow customers to see what they are paying for their premiums.
The investigation highlights an area of growing concern for UK car buyers – how to keep the cost of insurance down.
While things such as no claims bonuses can help to reduce insurance costs, the best advice is to downsize to a smaller car with a less powerful engine, as our guide to cars with lowest insurance shows.