Car Insurance For Young Drivers Investigated By OFT
Young drivers who have been affected by increases in car insurance premiums will no doubt welcome moves by the Office of Fair Trading (OFT) to investigate the motor insurance industry.
The OFT report has labeled the UK motor insurance market as “dysfunctional” and identified that it has pushed up premiums by around £225 million a year. The worst affected have been young drivers who have suffered sharp increases in the cost of young driver car insurance premiums. According to the Office of National Statistics motor insurance premiums now absorb around 18% of the average income for drivers aged between 18-21 years of age.
The report by the OFT has revealed that motor insurance premiums are being increased due to referral fees and the fact that some providers charge inflated prices for repairs and courtesy vehicles. Drivers who are “at-fault” are footing the costs for repairs that are arranged by insurance companies representing those drivers who are “not at-fault”, many of which refer drivers to businesses who charge higher rates in exchange for referral fees - reportedly anything from £250-£400 per courtesy car.
The findings from the OFT report have resulted in a call for a more in-depth investigation by the Competition Commission and should provide some hope to drivers who have been worst hit by inflation.
Andrew Goulborn, Commercial Director for Tiger.co.uk commented: “The cost of young driver's insurance has increased significantly more than insurance for more experienced motorists and, as such, these motorists should welcome news that the market is currently under scrutiny. As was highlighted in a recent Tiger.co.uk blog, put into context, the £225 million increase really only equates to £7 per driver, but we know that younger drivers have had to take the hardest hit. We are undertaking a number of initiatives here at Tiger.co.uk to help shoppers combat the rising costs of insurance such as continuing our efforts to increase the number of telematics providers that we feature on the panel, adding to the library of information offering advice on how to reduce young driver motor insurance costs and ensuring that all shoppers are able to adjust policy details such as excess levels and level of cover on the results page to provide peace of mind that they are getting the best price possible.”