The CC found that the insurance industry is not ‘working well’ for motorists as the current claims process – which separates the control between the insurer who coordinates repairs or a courtesy car, and the insurer who ultimately pays out – results in inflated premiums for all drivers.

It also highlights concerns over contracts with price comparison websites and insurers, which means that policies are not available at lower costs elsewhere.

The CC has been studying the motor insurance market for more than a year following a referral from the Office of Fair Trading.

Tom Jones, head of policy and public affairs at Thompsons Solicitors, said: “It’s welcome news that the CC has recognised some of the fundamental flaws in the motor insurance industry that we as a firm have been emphasising for months.

“Yes motorists’ premiums are too high, the figures speak for themselves. The truth is also that the insurers are making huge profits and individual drivers are paying for it.

“But the report also highlights a number of new concerns such as the poor standard of motor repair and the real value of price comparison websites. Talk and criticism is all well and good but changes also have to be made to address these concerns.

"The insurance market should benefit the drivers who spend hundreds of pounds year-on-year on their premiums not just insurance company shareholders.

“Actions must now follow to resolve the issues raised by the CC.”