Warnings have been made that the price of motor vehicle insurance is likely to rise significantly as an unintended consequence of efforts to drive down private vehicle insurance costs.

The alert has been issued by the National Association of Bodyshops (NAB), which represents the UK’s leading body repair specialists, ahead of a report by the Competition Commission due to be published in September.

“The Competition Commission’s investigation into private motor insurance costs could end up costing consumers via rising vehicle insurance costs for businesses,” warns Frank Harvey, head of NAB. 

“We have said from the outset that this investigation is flawed because it focuses only on private car insurance.  If insurers are faced with reduced profits from consumers, they’ll inevitably try to recoup margins elsewhere.  Vehicle insurance cost increases for businesses is a likely outcome”.

In September 2012, the Office of Fair Trading (OFT) asked the Competition Commission to carry out an investigation into ‘the supply or acquisition of private motor insurance and related goods or services in the UK’. 

The OFT commissioned the study because it said it had reasonable grounds for suspecting that a feature or a combination of features of the market for the supply or acquisition of private motor insurance and related goods or services prevents, restricts or distorts competition in connection with their supply or acquisition.

The specific scope of the investigation was to look at insurance cover against damage to property and personal injury supplied to or acquired by drivers of privately owned motor cars. It was not intended to cover cars or other vehicles used for business or motorcycles.