Lloyd’s Market Association (LMA) has labelled proposals by the Competition and Markets Authority (CMA) to reform the private motor insurance market as disappointing.
In its response to the CMA consultation, the LMA said that the proposed changes were workable but failed to address key issues and represented only “minor changes to the system of providing replacement vehicles and managing vehicle repairs now in place”.
David Powell, the LMA’s manager, underwriting, said: “These proposals are well-intentioned but fail to get to the real nub of the problem – the behaviour of credit hire firms, and some non-fault insurers, that is driving up costs for motorists in the UK.
“We support the CMA’s proposal to cap the amount charged for supplying replacement vehicles to non-fault customers. Capped costs should, in theory, limit insurers’ exposure to being over-charged. But we fear that there will still be scope for abuse as the reforms don’t remove credit hire firms from the provision of replacement vehicles, nor will the reforms prevent insurers that manage non-fault claims from passing on inflated costs to their competitors.
“Ultimately, our members feel that the reforms are not likely to deliver savings for customers, which is the real test. That’s why we’re urging the CMA to publish detailed success criteria on the reforms, and revisit the remedies in two years if they don’t deliver savings.”
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Lloyd's Market Association, Competition and Markets Authority, Europe, Motor