A damning Channel 4 investigation has put motor insurers under more scrutiny

A Channel 4 Dispatches programme that aired last night on ‘sharp practices’ in the car insurance market has ruffled feathers in the industry this morning.

Direct Line, at the centre of the allegations, was accused of putting profits before lower premiums for motor insurance customers. The claims made in the Dispatches programme included:

  • insurers of ‘not-at-fault’ drivers are hiking the cost of car repairs payable by insurers of ‘at-fault’ drivers following an accident; and
  • insurers are “steering” customers to using mechanics approved by the insurer and reducing car repair costs as much as possible for their own at-fault drivers through the use of approved mechanics.

Today, Direct Line, Ageas and the ABI have spoken out in anger at the claims.

Direct Line “categorically denied” any suggestion of manipulating costs. It added that its repair methods did not differ between at-fault and not-at-fault repairs.

Ageas distanced itself from the practices highlighted by Dispatches, and the ABI leaped to the defence of insurers.

Insurers under fire

But one accident management company, Concordance, welcomed the findings of the Dispatches probe. Chairman Conrad Murray accused insurers of “squeezing the supply chain”.

He added: “One has to ask, how bad the reputation of the private motor industry can get before real action is taken by insurers to address all that is wrong in the system.”

The motor insurance industry is already under heavy scrutiny and it is highly likely that the Competition Commission will be looking closely at the investigation’s findings after the decision by the Office of Fair Trading (OFT) to refer the car insurance industry to the competition regulator.

The OFT has previously described the market as “dysfunctional” and suggested that motor premiums were inflated by as much as £225m a year.

The Competition Commission’s provisional findings are expected to be released in September and much of its focus is likely to be on repair costs. The Dispatches expose will have given it lots to think about.

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