I think we’d all agree with the title as for many of us our auto insurance premiums have increased to a point where driving a car is downright expensive. I know our car insurance went from being somewhat reasonable to almost doubling in the past four years!
Now the Competition Commission has looked into the auto insurance industry for the past year and agree, car insurance premiums are too high and in part due to the “complex chain of claims”. The cost of repairs and replacement vehicles and shoddy repairs add to this cost.
The auto insurance market is an £11bn a year industry and even insurers who can grab a small percentage of the market can mean big business.
Even if you are not-at-fault in an accident, you still need to arrange for a replacement car and also the repairs to your car. The at-fault driver’s insurance is to pay the bills, but the Commission found that “This separation of control and liability creates a chain of interactions which result in higher costs for replacement cars and for repairs being passed on to at-fault insurers.”
Having the at-fault driver’s insurer handle the claim completely could save £150m-£200m a year.
The Commission is to have a final report out in September 2014.