Shares under pressure as government, FCA probe car insurance

16th Oct 2024 11:02

(Sharecast News) - Shares in UK motor insurance firms fell on Wednesday, after two investigations into the sector were announced simultaneously.

The Financial Conduct Authority is opening a competition market study into premium finance, which allows people to pay for motor and home insurance in instalments.

It will assess if people are getting "fair, competitive deals", including reviewing how aware customers are of financing options and the role of commission.

Graeme Reynolds, director of competition at the regulator, said: "People rely on finance to spread their insurance costs by paying in smaller monthly payments. We want to ensure that competition works well and make it easier for consumers to find the best deals."

Meanwhile, the government announced it was launching a task force intended to tackle what it called the "spiralling costs" of car insurance.

A number of bodies - including the FCA, consumer group Which? and the Association of British Insurers - have been asked to review motor insurance premiums, including identifying why costs are rising and if consumers are getting fair value.

UK motor insurance premiums have surged by an average of 21% since June 2022. The government said that was well above rises seen in many comparative European countries, such as Germany and France.

Transport secretary Louise Haigh said: "Car insurance is an essential, not a luxury. It is vital to accessing economic opportunities and this government is committed to getting costs under control.

"Our new, expert taskforce is a major step forward in delivering a fair deal for drivers."

As at 1130 BST, Admiral Group had lost 3% at 2,685p, while Direct Line had sunk 4% at 173.9p and Aviva had dipped 1% at 478.22p.