Deloitte has warned today that the decision by the Office of Fair Trading (OFT) to refer its probe into car insurance to the Competition Commission may affect the profits made by brokers who benefit from making money from the supply chain more than the insurers themselves.

“This morning’s provisional decision by the OFT to refer the private motor insurance market to the Competition Commission – after it found evidence that insurers compete in a dysfunctional way – is the latest in a long line of significant events for the motor insurance sector. It will have implications for the profitability of insurers and intermediaries.” stated Ian Clarke, a partner at Deloitte.

“In recent months significant tort reform has been introduced to improve the bodily injury legal claims process, and at the same time we have seen the first steps to ban referral fees paid for bodily injury claims.

“By turning its spotlight onto the position of referral fees payable by credit hire organisations and repair shops, the OFT is tackling some of the remaining anomalies in the market that it believes lead consumers to pay higher insurance premiums.

“While the OFT enquiry has been initiated only today, the implications for the broader insurance industry have been understood for some time. Any changes are likely to impact the business models of intermediaries to a greater extent than those of insurers.”