24 September 2014
LMA ‘Disappointed’ with CMA Final Report
The Lloyd’s Market Association (LMA) has expressed its disappointment with today’s final report from the Competition and Markets Authority (CMA) on private motor insurance, which confirms that the CMA is not proposing to tackle the unnecessary costs caused by credit hire. The CMA confirmed that credit hire costs add up to £178m to car insurance customers a year, but has not proposed a measure to tackle this fundamental issue.
David Powell said: “The CMA has downplayed the costs of credit hire by expressing the costs on a ‘per policy’ basis – even though their own research shows that credit hire creates unnecessary costs of up to £178m a year. It is remarkable that the CMA has not proposed a remedy to tackle a well-established AEC (adverse effect on competition) of this magnitude.
“Credit hire costs are borne by all policyholders, but the CMA’s findings are especially bad news for young and inexperienced drivers, and customers with an adverse claims record. These motorists will continue to pay higher premiums caused by excessive credit hire costs.”
The LMA will be discussing the outcome with the rest of the insurance market, and will consider making an appeal, to defend the interests of car insurance customers.
Powell also said: “Existing mitigation strategies have not worked, and fundamental legal reform is likely to be necessary to remove this unnecessary layer of cost.”
- ENDS -
Notes to Editors
For further information please contact:
James Milne, Communications Manager
Lloyd’s Market Association
T 0207 327 8405
T 020 7623 2368
About the Lloyd’s Market Association (LMA)
Formed in 2001 and located in the heart of the Lloyd’s Building in the City of London, the Lloyd's Market Association represents the interests of the Lloyd’s underwriting community. All underwriting businesses at Lloyd’s are members, together managing gross premium income of around £26 billion per annum.
For more information visit: www.lmalloyds.com