Proposed remedies will do little to address the problem of rising claims costs, analyst warns

The remedies proposed by the Competition and Markets Authority (CMA) for the private motor market represent a missed opportunity, according to Shore Capital analyst Eamonn Flanagan.

In a research note Flanagan said: “The provisional remedies offered by the CMA do not appear to be sufficiently far-reaching to rectify the underlying issues within the industry.”

He said that the lack of action on subrogated repair costs means that the CMA has done little “to address the fundamental issue which lies at the heart of the dysfunctional nature of the UK personal motor insurance market, namely that the insurer which is responsible for the payment of claims (the at-fault insurer) has little influence on the claims process, which is controlled by the not at-fault insurer”.

He concluded that the UK motor insurance market remains an “unattractive” investment proposition and said he did not expect rates to rise above “ugly” levels of claims inflation.

Topics