Inquiry into insurance prices begins
* OFT beings insurance premium inquiry * Premiums rising much faster than inflation * Number of uninsured drivers decreasing...
The Office of Fair Trading (OFT) today opened an inquiry into reports of spiralling car insurance premiums.
Figures from the AA's British Insurance Premium Index for the year ending March 31, 2011 reveal an average inflation-busting rise of 33.2% over 2010.
A What Car? investigation discovered some premiums had increased by as much as 77%.
The OFT said it will examine: the role of price-comparison sites, credit hire replacement vehicles, insurance companies use of approved repairers and add-on products sold with standard motor insurance cover.
It will also look into reports that car insurance premiums in Northern Ireland are significantly higher than they are in the rest of the UK.
The Association of British Insurers was the first to speak out in defence of the industry. It blamed insurance premium hikes on rising personal injury claims, excessive legal costs, fraud such as 'cash for crash' staged accidents, and uninsured driving.
According to the ABI, honest motorists are forced to pay an extra 500 million a year to fund compensation for the victims of accidents involving uninsured drivers.
In a separate statement issued by the Motor Insurer's Bureau, the Association of Chief Police Officers (ACPO) reported that there are 500,000 fewer uninsured vehicles on the road than five years ago.
Since 2005, roadside police enforcement has removed more than 750,000 uninsured vehicles, and levels of uninsured driving are expected to be reduced further following the introduction of the continuous insurance law earlier this year.
The OFT will publish the findings of its inquiry in December.