OFT Refers UK Motor Insurance Market to Competition Commission

LONDON--The Office of Fair Trading, or OFT, said Friday that it referred the U.K.'s private motor insurance market to the Competition Commission, or CC, for further investigation amid concerns that the market is not working well for motorists.

MAIN FACTS:

-The OFT provisionally decided to refer the market to the CC in May after a market study gave it grounds for suspecting that there are features of the market that prevent, restrict or distort competition.

-OFT study provisionally found that the insurers of drivers responsible for an accident appear to have little control over the way repairs and replacement vehicles are provided to the 'not-at-fault' driver.

-This may enable the insurers of not-at-fault drivers, and others such as insurance brokers, credit hire organizations and repairers, to engage in practices which appear to result in the cost of replacement vehicles and vehicle repairs provided to not-at-fault drivers being higher than they might otherwise be.

-Having considered the responses submitted during a public consultation process, the OFT continues to hold the view that a market investigation reference to the Competition Commission is warranted.

-CC has up to two years to report its findings; if it finds that features of a market are harming competition, it has powers to impose remedies to address the situation.

-Write to Rory Gallivan at [e-mail]; Twitter: @RoryGallivan

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