The UK motor insurance industry is "not working well for motorists", an investigation from the Competition Commission has found.
After a complex investigation which has lasted more than a year, the Competition Commission has found that a "complex chain" of factors, including the way in which no-fault claims are settled and contracts between insurers and price comparison sites.
The regulator is now proposing a series of reforms which will have wide-ranging implications across the £11bn insurance industry, with price comparison sites, insurers, vehicle hire outfits, repair garages and claims management companies all set to be affected.
The Commission found that too many drivers are footing the bill for unnecessary costs incurred during the claims process. Initially the price is paid by the at-fault driver; however, the costs filter down through an increase in costs to all drivers.
It is estimated that this is adding between £150m and £200m a year to motorists' premiums.
The relationship between price comparison sites and insurers has also come under scrutiny, with the Commission claiming that the deals requested by the sites reduce competition and push prices up.
The report also found how too many accident repairs are not carried out to the required standard.
The Commission's deputy chairman Alasdair Smith said: "Our provisional view is that many drivers of the UK's 25 million privately registered cars are footing the bill for unnecessary costs incurred during the claims process following an accident. These costs are initially borne by the insurers of at-fault drivers, but they feed through into increased car insurance premiums for all drivers.
"We are now considering a range of possible measures -- some of them far-reaching reforms -- to ensure that the market better serves the interests of customers."
The full report into the UK motor insurance industry will be published next year.
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