After studying the £11bn private motor insurance market for a year, the Competition Commission has come to the conclusion that motor insurance premiums are currently unnecessarily high for all motorists, including taxi drivers. These high premiums come from the complex chain of claims throughout the car and taxi insurance system, the cost of courtesy cars and repairs being placed on the insurer of those who cause the accident while the arrangements are placed in the hands of the company insuring the driver not at blame.
With the commission estimating the extra premium costs at somewhere between £150-200m every year, it’s hardly something to ignore. The disconnect between liability and responsibility that plagues the current motor insurance system is costing us all too much, something that could be changed if we took the commission’s ideas into consideration. These ideas include putting a cap on the amount that can be paid for a courtesy car or making the insurer of the not-at-fault driver responsible for the replacement car, thereby reconnecting the insurer with the responsibility of coverage. Alternatively, the at-fault driver’s insurer could manage the entire claim.
The high cost of premiums wasn’t the only thing flagged by the Competition Commission though. It’s estimated that drivers of a possible 25 million privately registered vehicles and many more commercial vehicles and taxis in this country have been facing substandard repairs following an accident. This is due to limited information from their insurer, making it difficult to identify the offer with the best value.
In addition, contracts between comparison websites and insurers exist that don’t allow certain policies to be sold for cheaper elsewhere. Further changes the Commission are considering for the future of the motor insurance system are compulsory audits of repairs to make sure there’s an acceptable standard of work taking place and making it a legal requirement that price comparison websites display clear information for the consumer. This way, they hope to bring a fair price to all motorists using these price comparison websites and assure that there’s no confusion on the part of the consumer. With these changes put in place, it’s hoped by the Competition Commission to reduce premiums by £6 to £8 per policy.