Article date: 24 September 2014
Rob Townend, UK General Insurance Claims Director at Aviva, said of today's final report from the Competition and Markets Authority:
“When the CMA began its investigation into the motor insurance market – which Aviva welcomed and supported – it set out to find if the market presented an adverse effect on competition.
“In light of this, Aviva is pleased that the CMA has decided to enhance the competitiveness of the UK motor market by banning agreements which restrict insurers from making their products available more cheaply elsewhere.
“However, the CMA's final report lacks any meaningful step change to reform poor market claims practices which would reduce the cost of motor insurance and improve outcomes for Britain's motorists.
“Aviva recently proposed its own set of reforms that will cut up to £1.4 billion from motor insurance premiums - a reduction of £50 on the average premium - and improve the service and support that customers deserve.
“For example, insurers have shown they can manage a customer’s replacement car at a much lower rate than when managed by third party providers such as credit hire organisations. Aviva’s data shows that the average cost for a replacement vehicle when managed by a third party was £1,333, compared to £450 when managed by Aviva. Likewise, we are able to get customers back in their car 4.5 days quicker, saving the customer time, and in the long run, money on their motor premium.
“We also believe the CMA should have recommended a comprehensive ban on referral fees, which add around £200m to premiums. As the CMA decided against this, and did not tackle the issues driving excess cost into motor insurance, we strongly urge the Government and Law Commission to push for further reform of the motor claims market. In addition to looking at the issues around credit hire and referral fees, we are talking to Government about how to best compensate minor, short-term whiplash injuries.
“We need to remove the excessive costs which continue to push up car insurance premiums without offering any benefit to the consumer. This is a significant challenge but such change brings its own rewards for the UK’s motorists – more affordable motor insurance.”