Reports that UK annual comprehensive car insurance premiums have risen by as much as 40 per cent in 2010-11 and that premiums are higher in Northern Ireland than in mainland Britain prompted the Office of Fair Trading (“OFT”) to issue a call for evidence on the UK private motor insurance sector. The OFT wants to Understand whether the reports of premium increases are accurate, the reasons for the increases and whether there is anything the OFT or other parties could be doing to improve the functioning of the market.  

The OFT has identified a number of aspects of the market that may raise competition or consumer issues, including:

  • The role of price comparison websites;
  • The provision of credit hire replacement vehicles to drivers who are involved in accidents that are not their fault;
  • Insurance companies’ use of panels of approved repairers; and
  • Ancillary products (such as motor legal protection) that are sold by insurance companies in addition to standard private motor insurance cover.  

The OFT has sent questionnaires to insurers, credit hire providers, vehicle repairers and price comparison sites. Consumers and other interested parties are also invited to submit comments to the OFT – see the OFT’s website which can be accessed here. All responses are invited by 12 October 2011.

If any concerns are identified following the call for evidence, the OFT will work with the Government and the FSA to decide which organisation is best placed to address them. Options available to the OFT include the launch of a market study into specific aspects of the market, seeking voluntary action from the industry or undertaking further work to consider whether it would be appropriate to refer the market to the Competition Commission for in-depth analysis.

The call for evidence is not an investigation into individual insurers’ practices, although the OFT can take action against individual insurers if it uncovers any individual activities that breach the rules prohibiting anti-competitive agreements or abuse of market dominance or the consumer protection rules.

The OFT plans to publish its findings in December 2011 at which point it should be clear whether any further action will be undertaken.