Is the behaviour of insurance companies causing increased premiums for consumers?

I have just heard on the radio that car insurance premiums have gone up by 35 per cent in the last two years. The usual excuses are trotted out: more people claiming for injuries, young uninsured drivers, etc. I think insurance companies should be looking in the mirror.

Somebody ran into the back of my 10 year old Toyota Avensis last week. My insurer gave me the name of a garage which it nominated to carry out the repair. An assessor came and estimated the damage at £1130, with a proviso they might find more damage when they strip the car. The third party wanted to settle privately, so I went to a local garage that had been recommended for its quality of work. He estimated the price at £400 maximum; slightly over a third of the original quote. When I mentioned the possibility of additional damage once the car was stripped down, he said he'd been doing body repairs for 30 years and he knew what to expect.

I have just picked up my car, the repair is first rate and the price as estimated. Why is this rip off allowed to continue? Why doesn't the government step in to outlaw this cartel? It is stopping competition and adding to inflation. We, the drivers, are paying for this scam, with exorbitant premiums. Have you any suggestions?

Asked on 18 February 2012 by WO, Warrington

Answered by Honest John

Well put, and something I've heard 1000 times and ran 100 times. The problem is institutional organisations, institutional inefficiency (the costs of which can easily be passed on the customers who have no choice other than to pay), the graft and greed of the pariahs who see this as easy money, and governments that encourage this. Part of the leakage is through 'accident management' outfits pursuing spurious personal injury whiplash claims and part through 'credit hire' cowboys, not actually through the repairers. Yes, these dubious activities should all be investigated and banned. There was talk of it. But with so many vested interests this is far easier said than done. It's easy corruption. The end user pays because he has to pay because insurance is compulsory.

Tags: premiums insurance accident management

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