Car insurance premiums are too high and should be reduced through a number of wide-reaching reforms, according to the competition watchdog.
The Competition Commission claims that too many drivers footing the bill for unnecessary costs incurred during the claims process following an accident.
However, it also investigated the relationship between price comparison websites and insurers, as it attempts to bring down the price of premiums.
According to the commission, the added premium costs due to the separation of control and liability on replacement cars and repairs was around £150 million to £200 million per year.
During its research it found that motorists were bearing the brunt of these unnecessary costs following an accident, and that it was considering a cap on bills for replacement vehicles and repairs.
Alasdair Smith, who is leading the watchdog's investigation, said: "We are now considering a range of possible measures, some of them far-reaching reforms, to ensure that the market better serves the interests of customers."
Following the initial research, the commission also said that it was considering making a driver’s own insurer responsible for providing a replacement car, while it also said that there should be compulsory audits of repair quality as too many repairs were not completed to the required standard.
Other findings included problems with add-on products, which makes it hard for consumers to find the best-value products and that insurers have a point-of-sale advantage with these.
"There is insufficient incentive for insurers to keep costs down even though they are themselves on the receiving end of the problem," Smith added.