Drivers are being ripped off by £200m each year because of "unnecessary costs" being heaped on them after accidents, the Competition Commission warned this week. Insurance costs have been bumped up – by about £8 a policy – by the use of expensive replacement cars and repairs, which are often not up to scratch, according to the Commission.
And the problem is that insurers have little incentive to do anything about rip-off charges by third parties as they can simply pass the costs onto customers in the form of higher premiums.
That's because in most cases, the party managing the accident claim, usually a non-fault insurer or intermediary, is not the party liable to pay the costs of the claim. In short, according to the Commission, there is insufficient incentive for insurers to keep costs down even though they are themselves on the receiving end of the problem.
Insurers point out that car cover costs are falling, partly because of a Ministry of Justice clampdown on the number and value of whiplash injury claims, many of which are fraudulent. But it's time the insurers themselves took responsibility for cleaning up the rogue practices of firms they deal with, rather than passing the buck yet again.
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