CAR INSURANCE MARKET COMES UNDER SCRUTINY

Thursday, 31 May 2012

Following this week's announcement that the car insurance market was to be referred to the Competition Commission for examination after it was described as ‘dysfunctional’ by the Office of Fair Trading (OFT), John Pugh is urging residents to help clean up the industry.

A review of the market by the OFT found that many car insurers were ‘conniving’ with garages and hire car suppliers to drive up insurance prices and the costs of repairing or hiring a car.  The original decision of the OFT to investigate the car insurance market was taken after motor insurance premiums rose by almost 40%.  In 2010 a young driver from Southport was quoted more than £26,000 to be insured on his grandmother’s car, more than 90 times the value of the vehicle.

In its review, the OFT estimated that this sort of price inflation cost UK drivers around £225million a year, prompting local Lib Dem MP John Pugh to describe these practices as ‘criminal’.  He also asked local residents to send him their car insurance ‘horror stories’ so he could raise them with the OFT and the Competition Commission.  He said:

“This sort of behaviour is despicable at the best of times, but in a recession when people are struggling to make ends meet, it’s absolutely criminal.  I've heard tales of courtesy cars being provided for a man who broke both legs in an accident and people who have been out of the country on holiday because it pays insurers to do a deal on wit hire firms. There is clearly something rotten in the state of the car insurance market. The ordinary motorist is picking up the tab and it is about time action was taken.

“I would therefore like to ask Southport residents to send me their car insurance “horror stories” to submit as evidence to the Competition Commission.  This is a great opportunity to clean up the car insurance market, and the more damning the weight of evidence the better.”

Those who would like to send their stories to John Pugh MP can do so via the Contact Form on the website or via telephone on 020 7219 8318, or via post at:

35 Shakespeare Street, Southport, PR8 5AB