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The Office of Fair Trading (OFT) is to refer the private motor insurance market to the Competition Commission for practices that, it claims, drive up the cost of premiums. A statement on the OFT website says:
Insurers are making money from drivers who break down by referring them to a range of emergency services.
For example, credit hire firms pay tip-off fees of around £300 for details about a driver involved in an accident so that they can arrange a courtesy car. The bill is then passed on to the at-fault motorist's insurer for the cost.
Evidence to the Office of Fair Trading suggests credit hire firms charge between £1,200 and £1,500 for the service, compared with £400 to £500 if the insurer organised the vehicle themselves.
Insurers have raised the cost of premiums for millions of drivers in the last few years while profiting from unfair practices, according to a report out today.
The investigation by the Office of Fair Trading finds that when an accident happens, insurers of the driver who is not at fault are selling the details of crash victims to rip-off repair and car hire firms.
The insurer of the driver who is at fault is then forced to shoulder the cost of repair work and replacement vehicles, driving up premiums.
Drivers who are involved in accidents become "hot property" as their details are passed on to garages, breakdown firms and even the emergency services.
Latest ITV News reports
A road crash can have big financial impact - but new evidence suggests the insurance firms meant to protect us, are adding to the costs.
"Dysfunctional" practices in the motor insurance industry are pushing up premiums by £225 million a year, despite attempts to blame drivers