The insurance industry, who has long since blamed rising premium prices on the so-called ‘compensation culture’ fostered by no win no fee accident claims, is under investigation by the Office of Fair Trading to determine the root causes of the issue.
Probing whether there is a lack of competition between major insurance providers, the OFT is leaving off their claims that no win no fee lawyers have been the driving force behind the 40 per cent increase in car insurance premium prices over the last 12 months. However, insurers are still crying foul over an increased number of car accident claims, stating that the increased costs of paying out on the rising number of claims is crippling them financially.
The consumer watchdog will instead be focusing its investigative efforts on the impact insurance comparison sites have had upon the marketplace. Some of these price comparison sites are actually owned by major insurers, such as Admiral Group-owned Confused.com.
The OFT will also be investigating what kinds of impact additional insurance products, such as the provision of replacement cars, approved repairers, how claims are dealt with, and legal protection on premiums, have had on the insurance marketplace. The results of the study will be collected and published this December.
Otto Thoresen, the Association of British Insurers’ director general, said he ‘welcomed’ the OFT’s probe, as it will give the industry in general another chance to showcase the kinds of pressures car insurance providers are facing in regards to costs. Mr Thoresen also said that the probe will further bring to light the steps the industry has undertaken to ensure their policyholders get the most complete and comprehensive cover they can.