The car insurance industry is to undergo a full-scale investigation after evidence was unearthed which suggests companies are rigging the market to increase premiums.
The Office of Fair Trading (OfT) referred the case to the Competition Commission (CC) in May, after a public consultation which revealed there were features of the market which "prevent, restrict or distort competition."
British drivers currently pay, on average, more than £1,000 a year to insure their cars.
The OfT has concluded that motorists are paying up to £225million a year too much for premiums, and that inflated repair prices and courtesy car hire are the main reasons for the inflated prices.
Car repairs were found to be, on average, £155 more expensive than they needed to be, and courtesy car hire was found to be a staggering £560 dearer, on average, than necessary.
OfT Chief Exec Clive Maxwell said: "Competition appears not to be working effectively in the private motor insurance market. The insurers of at-fault drivers appear to have little control over the bills they must pay, and this may be leading to higher costs for them and ultimately higher premiums for motorists.
"Having publicly consulted on our provisional decision, we are still of the view that there is no quick fix to these problems, and that a more in-depth investigation by the Competition Commission is therefore appropriate."
