Premiums could soar on OFT decision - credit hire chief

Credit Hire Organisation (CHO) director general Martin Andrews warned today that the Office of Fair Trading’s (OFT’s) decision to refer the private motor market to the Competition Commission could cause motor premiums to soar.

Andrews believes that premiums could rise or the replacement vehicle market could collapse, leaving customers to take public transport.

Instead, he believes the ABI should have the main role in solving the problems.

“The CHO understands this move from the OFT, given the complexity of insurer behaviour in the market for the supply of motor insurance and related goods and services,” he said.

“But we continue to have serious concerns as to the long-term impact it may have on the motoring consumer and their right to mobility after an accident that was not their fault.

“If the CC concludes that the at-fault driver’s insurer should have control over the not-at fault driver’s claim, motoring consumers could find themselves in a lose-lose situation.

“We could see premiums soar as insurers try to make up losses as they are forced to pay out for replacement vehicles; or insurers will find ways not to provide replacement vehicles and not-at fault drivers will be forced to ‘make do’ and catch the bus.

“In each scenario the consumer will lose out, and hundreds of years of case law, establishing the consumer’s rights in the event of an accident, will be over-turned.”

Andrews is now urging the Competition Commission to think again, and let the ABI solve the problem.

“We urge the CC to look for solutions in existing structures, most obviously the Association of British Insurers’ General Terms of Agreement,” he said.

“This is an effective mechanism, supported by both credit hire companies and insurers, whereby the costs of a replacement vehicle are minimised and the interests and legal rights of the UK consumer are protected.

“To ensure that these consumer rights remain at the heart of this debate, it is vital that credit hire companies and insurers continue to work with one another and with the CC. The CHO looks forward to further constructive engagement with interested parties over the next two years.”