The motor insurance industry has come under scrutiny for this possible malpractice and the OFT investigation will try to resolve how widespread this practise is within the industry.

The concern is that insurers are stoking up prices by selling details of their policy holders’ accidents to no-win, no-fee solicitors. If like me you have been unfortunate enough to be involved in an car accident in the past couple of years, the likelihood of you receiving a call out of the blue or more likely a text from an unknown source days after reporting an accident to your car insurers, suggests this malpractice is writhe in the motor insurance industry.

Fortunately, I was only involved in a minor traffic accident with no casualties and I was nothing more than shaken up by the experience.  But imagine a worst case scenario whereby you find yourself having to deal with offers to win compensation when you are grieving.

Furthermore, the OFT are also investigating the cost of motor accident repairs and courtesy replacement cars.

Insurance companies recommend car accident and car hire supplier.  In my case, the accident repair garage my insurer recommended was a Mercedes garage, 10 miles away from my home.  As my car is a Honda Accord, and I have a good relationship with my local Honda dealer, I questioned how this could be better for me and cheaper for the insurance company.  I wasn’t given an answer, just told that it would delay repairs to my vehicle if they had to send a representative out to inspect the damage and approve an ‘independent quote’.

It is alleged that some “approved” garages also pay referral fees to insurers too.  In exchange, the insurers stipulate expensive paint and parts and even higher labour costs. The costs of which is paid for, and helps to justify, higher car insurance premiums.

Sonya Branch of the OFT said:

“Our concerns relate to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants, where we suspect companies may be competing to extract money from each other rather than keeping premiums as low as possible and providing car owners with value for money.”

Preliminary findings by the OFT strongly suggests there is a correlation between referral-fees and the actual rise of car insurance over the past 12-24 months.

For many of us who rely on our cars whether they be a two-seater Smart car or 7 seater 4×4 there is no alternative than to shop around for the best deal and look to be rewarded by a no-claims bonus or insuring two or more vehicles at the same address. But it is a comforting thought that the OFT are at least looking to tackling such irregularities in the motor insurance industry.

In his announcement Clarke said that a reform was needed to “put the brake on runaway legal costs and mean a better deal for genuine claimants and insurance customers.”

The ABI have long campaigned that high legal costs in settling personal injury claims is one of the main reasons for the general rise in motor insurance premiums.

Nick Starling of ABI said; “For too long ambulance-chasing lawyers and claims management firms have encouraged many people to believe that there is a compensation culture to exploit. The result has been a slower process for genuine claimants, and out of control legal costs that end up being paid for by all consumers through higher insurance premiums.”

The ABI claims that for every £1 paid out by motor insurers in compensation, another 87 pence is added in legal costs.

We will have to wait for news from the government as to what reforms they will make to the compensation market and whether motor insurance premiums will decrease as a result of any such changes.

The changes will not come into effect until December 2012 allowing the industries in question time to adjust, but doubtless there will be some increases in both in the interim.

The British Insurance Brokers’ Association (BIBA) said currently the cost of the average car claim by an 18-year old man was £4,400, while that for an 18-year old woman was £2,700.

“The ruling will have a significant effect on the insurance industry which has used the system of risk based pricing to award discounts to lower risk drivers like young females who are statistically safer drivers.

The industry will have to change its model and effectively females will now pay a cross subsidy for males on their insurance premiums,” said a BIBA spokesperson.

Young female drivers are likely to be among the worst hit by the ridiculous ruling and the AA warns that premiums for females under 30 could rise by up to £400 per year.

Maggie Craig, acting director general of the Association of British Insurers (ABI), said: “This gender ban is disappointing news for UK consumers and something the UK insurance industry has fought against for the last decade.

“The judgment ignores the fact that taking a person’s gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance.”

Pensions

The ruling will have an effect on the cost of pensions when it comes to buying an annuity, as women statistically live longer than men and so receive a smaller annual pension for a longer period from the same size annuity pot.

The first impressions from the pension industry suggest that men will end up getting smaller annuity income than they do now when benefits are bought into line with those of women.

So as far as I can tell, without being discriminatory, we will all end up losers!

Compared to atrocious weather in the same period of 2009, the cold snap in November and December 2010 was not only more severe, but lasted longer and affected more of the country.

Insurance claims against property and vehicles reached a staggering £1.4billion over the most recent winter period compared to the measly £650million paid out for damage caused in 2009.

In fact burst pipes alone accounted for more in pay outs in 2010 than the total claims from the previous winter, with over 100,000 claims totalling £680million.

More than 250,000 vehicles were damaged as a result of the snow and ice on the roads, leading to claims for a further £530million it is claimed.

The Association of British Insurers (ABI) who released the figures, suggest that there is no evidence that premiums had increased as a result of the cold weather, but I am sure that will follow during the course of this year.

The necessary spending cuts implemented by the coalition government will surely mean that most of us will either have less to spend or higher bills to pay in the new year and onwards.

If the CBI predictions are right home owners will be paying a lot more interest on their mortgages although at least that would benefit savers who may as well have kept their money under the mattress for the last couple of years, as I’m sure some actually did!

Travel problems have been very much at the forefront of the news this year, what with air strikes, volcano ash and most recently severe disruption to flights and trains due to the weather.

I would imagine that this will somehow equate to an increase in travel insurance premiums in the near future as insurers attempt to recover some of this years losses.

The motor insurance market however has already hit the headlines earlier this year when the AA reported that premiums had generally risen by over 40%. The reason given for such an incredible leap in premiums was young male drivers.

There are apparently more accidents on the UK roads caused by young male drivers than any other group of drivers, they also cause more deaths on the road and often drive without insurance. They were also found to be the most likely age group to drive whilst under the influence of drink or drugs.

Despite often being a loss leader, the UK motor insurance market is also seen as a bit of a jewel in the crown amongst insurance companies as the many leading insurers advertising on TV will testify.

This represents some good news for those of us looking for cheap car insurance and also means that there is alternative to accepting the new premium from your current insurer if it has increased beyond belief.

Competition is still very healthy in this market and in these hard times it is worth looking at how further savings can be made on motor insurance by increasing excesses for instance or looking out for advice and tips on insurers websites.

There are of course several factors that have changed the used car market, not least the financial crisis or credit crunch that has affected most of us in some way or another in recent times.

The huge increase in global fuel prices experienced not too long ago would have been a major influence on the market affecting larger fuel guzzling vehicles and although the price of oil has since steadied the volatility of the market still lingers.

Then of course is the ecological side of motoring, we are now all more aware of our moral obligations in reducing our own personal carbon footprint and the government has helped by introducing a sliding scale of road tax that reflects on the emissions of our vehicles.

Running a luxury vehicle is an expensive business and that doesn’t stop at the petrol pump in the garage forecourt. Servicing, repairs and replacement parts are far more expensive and a set of tyres for a Ford Fiesta for instance might just about buy one tyre on a BMW 5 series.

So there are plenty of good reasons why the market has changed and little reason to be suspicious at what seems like a bargain price on the vehicle that you may have always promised yourself.

If you are happy that you can afford the running costs, then first check that the vehicle has an up to date service history with an authorised dealer, this is essential on vehicles in this category so be prepared to walk away if it is missing, there is plenty of choice right now and your patience will undoubtedly be rewarded.

Once you do find the car of your dreams be sure to run an HPI check that will let you know if there is anything untoward about the vehicle, for instance outstanding finance, stolen, clocked or previously written off. There is a charge for this service but it could save a lot of heartache in the long run.

Now is the time to check out the cost of insuring the vehicle and it would be wise to compare the car insurance market by obtaining several quotes from various companies.

One way of reducing the insurance premium is by choosing a voluntary excess, but bear in mind that should you make a claim you will be liable for the voluntary excess that you have agreed.

For instance if the claim is for £1,000 and your voluntary excess is £250, the insurer will only pay out a maximum£750 (depending on the claim) and the balance will come out of your pocket.

The Advocate General has argued that offering cheaper premiums to women could be illegal even though women make fewer claims, cause less accidents and, statistically, make less expensive claims.

Nigel Lacy of Young Marmalade believes that such a move, were it to become law, would be grossly unfair particularly on young female drivers.

“There is a minority of young male drivers who are increasing the cost of insurance for all road users. Statistics from the Department of Transport indicate that one third of all the men killed or seriously injured on the roads are less than 25 years-of-age,” said Mr Lacy.

“Those under 21 were ten times more likely to have an accident than the over 30s. The cost of their claims is more than three times more expensive than the older age group.”

Currently, a young woman in the 17 to 22 age group in the UK can expect to pay about£1,400  as opposed to a male driver of the same age who would be expected to pay at least twice that figure. If the EJC decided that this was discriminatory this discount would disappear and the cost of insuring young male drivers would be distributed throughout the whole industry.

Fair comment, but as the AA recently pointed out motor insurance premiums for all of us have risen by a staggering 40% plus this last year, so surely we are ALL paying the price of the problems caused by young male drivers already.

While we are all being hit by the huge increase in motor insurance the experts believe that their is a minority of drivers that are causing the rest of us to pay more on our premiums.

The minority in question are young males between the age of 17 and 22 years old. Nearly a third of male drivers killed or seriously injured during 2009 were aged under 25. Those under 21 were ten times more likely to have an accident than the over 30s. The cost of their claims is more than three times more expensive than the older age group.

Motor insurance premiums for this group have risen above the average rate and young drivers in this group on average are likely to pay around £2,500 for their motor insurance, although the young driver specialist insurer Marmalade believes that young male drivers are likely to be paying up to double that figure.

With the extremely high risk involved it is little surprise that insurance companies feel the need to collect such massive premiums from this group, but pricing them out of the market altogether is also having a detrimental effect on the industry.

There are more drivers than ever (of all ages) who are prepared to take huge risks on the road by driving without insurance and young drivers add further to the risk by having little experience and in many cases no respect for other road users or laws.

Young driver specialist, Marmalade have warned that improving the safety of young drivers was the only way to reduce insurance premiums for everyone and they are currently testing on-board systems which monitor how the car is being driven, highlighting any issues such as excessive braking or cornering, which may be of concern to an insurer.

This may lead to the withdrawal of insurance as an ultimate sanction for drivers deemed to be a higher risk. Marmalade is also keeping the cost of its insurance to allow more practice in family cars at the vital learner driver stage at the same level as last year despite the massive rises seen elsewhere.

Nigel Lacy of Marmalade said;

“There is a minority of young male drivers who are increasing the cost of insurance for all road users. The only way insurance premiums can be reduced is if young people can be encouraged to drive more safely.

The cost of insuring this group or dealing with uninsured drivers obviously impacts throughout the whole industry. At Marmalade we are pioneering ways that will make the roads safer for all motorists.”

Marmalade provides young drivers with cars and insurance as a combined package. The result is that young drivers are in newer, safer cars and enjoy lower insurance premiums. The company also insists that new drivers undertake additional training after passing their test to improve the levels of young driver safety.

A recent report on the BBC News website claims that AA Insurance Director Simon Douglas believes premiums will only come down when the ‘carnage’ caused by young drivers stops.

New drivers are normally penalised by insurance companies as soon as they sit behind the wheel. Premiums on even the most modest family car will skyrocket when a learner driver tries to gain that valuable practice between professional driving lessons – increases of more than £3,000 are not uncommon.

Thankfully there are insurance companies who are trying to help young drivers gain that vital experience on the road and leading the way is Young Marmalade, who specialise in insuring young drivers and who have developed the Provisional Marmalade package specifically for this market.

Provisional Marmalade provides a stand-alone insurance policy to allow a learner to practice in a family or friend’s car. There is an added bonus in that should anything happen whilst the learner is driving, the claim is made against his or her policy and does not affect the insurance of the car owner, even the no-claim status – a welcome thought for anxious parents.

The Driving Standards Agency responsible for overseeing the driving tests recommends additional private practice to help new drivers gain experience and have a better chance of passing the driving test.

Costing in the region of £3 per day and providing comprehensive cover for cars up to insurance group 16 out of 20, this new policy will benefit many of the 1 million plus new drivers that apply for a provisional licence every year.

When you apply for a policy you will have done the proper research. You will have looked through clicked through affiliate programs to view rates of competitors. You will figured out just what you can afford and what’s being offered to you. You should wonder, however, if you are getting the best price. This is where the help of a qualified agent comes in. Not only will these agents knows the ins and outs of the policy, but they will be adept at knowing where you can shave dollars off your policy.

A good agent acts more like a good friend than just an employee. A good agent will see policy changes down the road and will help you avoid rising costs in your policy. He or she might be able to find a new policy that will get you a better premium or a lower deductible. Your agent should see the future of your auto insurance and be willing to help you choose the right path.

Your agent also knows how to handle a crisis. Everyone gets into an accident at some point. Filing a claim can be bothersome, but a trusted agent can walk you through it and handle much of the leg work. A good agent will save you more than you thought possible on car insurance.