CMA blamed for rising claims inflation
The failure of the Competition and Markets Authority (CMA) to take action over the motor market is partly to blame for rising claims inflation, according to Covéa Insurance chief executive James Reader.
The motor insurance market has been hit by rising claims inflation due to several factors including; the fact there are more cars on the road, the economic recovery, cheaper petrol prices and the claimant side working its way around the law reforms.
But Reader told Insurance Times, the inaction of the CMA following its probe findings, particularly around inflated vehicle repair.
Despite recognising there were problems, the CMA took no action on inflated vehicle repair costs when it released the findings of its long-awaited probe into the motor market a year ago.
‘I think the CMA basically ducked the issue. They said that yes, there is a problem there, but couldn’t come up with a solution to it.’
‘I think at the time we felt that the challenge with that conclusion was that things might not just carry on, but get even worse.’
‘I think certain players in the market looked at that conclusion and saw it is an opportunity to not only keep on doing what they are doing, but accelerate it and push the model even harder,’ said Reader.