Talking exclusively to broadcaster BBC this week, inveterate controversialist Sonya Branch of the Office of Fur Trading made the inflammatory claim that the car insurance industry is “not running in the most efficient way”. She should know, she argues, because the OFT has just done a “study” on motor insurance and why it is so bloomin’ expensive.
According to reports on the BBC News website, the OFT study revealed that “artificially high car hire and repair charges add £225m a year to drivers’ premiums”. Now the OFT is suggesting that the sector might need some looking into by The Competitors Companion.
OFT chief exec John Fingermouse added to the controversy with the extraordinary allegation that “Competition in this market does not appear to work well for drivers”. Some insurers are conniving, Ms Twig told the BBC, with garages and suppliers of courtesy cars to let them charge inflated prices.
Nick Startling of insurer body ABI demurred at defending the defensible and said he completely agreed but it was all someone else’s fault. “Inflated rates for credit hire cars and excessive hire periods have led to higher premiums”, he said
“There is no control of costs, which have run away”, Startling lamented helplessly. “Some people have taken advantage of the system”, he went on to confide darkly.
BBC Arts correspondent Will Gompertz concluded that “If any more evidence was needed that car insurance has turned into a gravy train for a variety of businesses, it is here for all to see in the OFT’s market study.
“But a Competition Commission inquiry will shine an even brighter light into the murky world of backhanders which has distorted car insurance and led to policies becoming unaffordable for some drivers.”
Outraged at being singled out in this clearly vindictive and politically motivated way, credit hire organisation the Credit Hire Organisation (CHO), argued that “the excessive costs identified by the OFT in its report amounted to just 2% of the car insurance industry’s total spending of £13bn a year” and therefore, clearly, were ‘no biggy’ and probably not worth investigating.
Fortunately for any and all alleged advantage takers, the OFT’s Fingermouse stressed that there was no “quick fix” for the problem. This may partly be because the OFT’s view that it might want the competitors companion to investigate the motor insurance sector is “a provisional one” and it won’t decide whether it really is requesting an investigation before October 2012.
Sonia Root speaking to the BBC: "mixed emotions"
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