Published Friday, 28 September 2012
NI motorists pay over 10 per cent more on average on car insurance. (© UTV)
The motor insurance industry- worth an estimated £9.4bn in the UK- is to face a full-blown investigation after competition watchdogs said the market was not working well for consumers and found premiums were being pushed up by £225m a year.
The Office of Fair Trading (OFT) referred the industry to the watchdog, after finding in May that motor insurance market was "dysfunctional", with signs that insurers of at-fault drivers are being taken advantage of by insurers of not-at-fault drivers and others involved in providing repairs and courtesy cars.
This is thought to be inflating the cost of providing replacement vehicles by an average of £560 a time, while the cost of repairs was £155 more.
It said after crashes, many insurers of not-at-fault drivers, brokers and repairers, refer the drivers to organisations that tend to charge higher rates in exchange for referral fees of around £250 to £400 per hire car.
If the Competition Commission finds that features of a market are harming competition, it has powers to impose remedies to address the situation, so their decision could potentially affect every motorist in Northern Ireland.
Antoinette McKeown, Consumer Council
The Consumer Council wants to ensure that the voice of Northern Ireland's motorists in heard is the process.
CEO Antoinette McKeown, said the move has the potential to affect positive change for motorists in Northern Ireland, who pay on average 11% more on insurance than in the rest of the UK.
"The Consumer Council has had long-standing concerns with the cost of car insurance and certain features of car insurance market in NI. We asked the OFT to look at the car insurance in August 2011," she said.
"The OFT investigation was bolstered by the 5000 consumers who signed our petition over a 40 day period and the 1500 consumers that contacted us to tell us their story.
"The report also showed that we don't shop around for our car insurance as well as others in the rest of the UK and that legal and compensation costs were pushing up car insurance premiums here also."
Ms McKeown said that the council will continue to engage with the competition watchdog and local government on the issue.
SDLP MP Margaret Ritchie said that the Northern Ireland Executive needs to speed up their review of the region's insurance market.
"The bottom line is the Northern Ireland Executive must now do away with referral fees, and only yesterday I was told by the Minister for Justice that they established a committee of ministers back in June," she said.
"How long is this consultation going to last, how long is it going to be before they are going to play their part in reducing insurance claims for the people of Northern Ireland."
© UTV News