OFT calls for evidence on motor insurance With annual car insurance premiums reported to have risen by as much as 70% since 2010, the Office of Fair Trading has launched an investigation into practices in the motor insurance industry. Under the spotlight will be various aspects including the role of price comparison sites as Nick Johnson reports.
Topic: Insurance
Who: Office of Fair Trading (OFT)
Where: UK
When: September 2011
Law stated as at: 6 October 2011
What happened:
Following reports of UK car insurance premiums rising by as much as 40% in 2010-11, the OFT has issued a call for evidence on the UK private motor insurance sector. They say they are seeking to identify whether these reports are accurate and, if so, what factors are responsible and whether the OFT can do anything to help the market function better. They are also interested in reports that car insurance premiums in Northern Ireland are much higher than in the rest of the UK.
The OFT's closing date for responses is 12 October 2011, and they expect to publish their findings in December 2011.
Why this matters:
Interestingly, one of the issues the OFT seem particularly interested to explore is whether price comparison websites may be having an adverse effect on the market.
The Financial Services Authority (FSA) has already raised concerns about the fair treatment of consumers who buy insurance on price comparison websites and is currently consulting on proposed guidance for businesses that operate these websites.
This new focus from the OFT suggests they're sniffing around some potential issues to do with transparency, access to historic customer data and the degree of market competition, and also whether the way price comparison sites work may increase the likelihood of consumers providing false information. Their findings could have ramifications for comparison services of all kinds, including as to how these are marketed.
