What the OFT? Keeping pace with rising vehicle insurance

Over the last six months or so, WhatCar magazine has been keeping an eye on the scandalous rises in car insurance premiums that have befallen UK drivers in 2011, as have we in more recent times here at cheapvaninsurance.co.uk refelcting our concerns over rising van insurance costs.

In many ways car and van insurance premiums do differ; however, when it comes to slapping up insurance premiums, it seems, certainly this year, that both domestic and commercial vehicles have fell under the same jurisdiction.

The level of increases attracted interests from outside of the industry, prompting the Office of Fair Trading to investigate claims made by the vehicle insurance providers that their increases were justifiable. Certainly, in the domestic market, the cry was palpable from UK citizens from every insurance bracket across the length and breadth of the country.

Way back in May, when it was evident that increases were not just a one-off to pay for the excesses of the 2010/2011 winter but were going to proceed throughout summer, WhatCar assessed the figures available at that time, as purported by the AA’s British Insurance Premium Index. At the end of spring 2011, when inflation was between 4-4.5%, depending upon which of the three indexes you favour, your average vehicle insurance policy had risen by almost one third, at 33.2%; simply put, if your premium cost you a grand last year, you were going to have to fork out £1,332 this, irrespective of any no claims bonus you thought you may be entitled to.

the AA has its say

At that point in time the AA president, Edmund King, believed that insurance premiums had been kept unrealistically low, with vehicle insurance providers looking to target market share rather than profit; he claimed that, by late 2009, “costs were, on average, exceeding premium income by 23%.” This hints that there was always going to be a sting in the tail, once your van insurance broker had got your loyalty, as you looked to protect your no claims by staying with them.

Then the market shifted somewhat, with the rise and rise of the comparison site; that sting, in order to stay competitive, had been delayed until absolutely unavoidable, which is why we have seen such vast increases in vehicle insurance premiums, year to date, 2011.  But by this degree?

When challenged about vehicle insurance companies perhaps tagging on a little extra to the necessary increases, Mr King expressed the view “I really don’t think there is profiteering,” and pointed to the fact that comparison sites “sell on price.”, enforcing greater competition.

Okay, so now he gets it. Later in the year, the OFT really did wade in on the war against van insurance premium increases.

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