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ABI comment on Telegraph story on repair costs

An ABI spokesperson said:

“It is common for a motor insurer to agree what are effectively bulk discounts with car repair companies. This practice is not new, is in line with other sectors who use economies of scale and helps control claims costs, which benefits customers.

“When an accident occurs and the non-fault insurer initially pays for repairs, they are under no obligation to pass on these discounts to their competitors when they seek reimbursement from the at-fault insurer. The system could work better and the industry welcomed the investigation by the Competition and Markets Authority in this area in 2014, but the CMA chose not to take action.

“Repair costs still contribute less than a fifth towards the cost of a motor premium compared to more than a third for personal injury pay outs. Costs involving discounted repairs are a drop in the ocean compared to the impact on motor premiums arising from the increasing complexity of repairs, the rise in Insurance Premium Tax, changes to the Discount rate and whiplash-related claims.”

Last updated 31/07/2017