Fair trading chiefs today launched a study into private motor insurance following big hikes in premiums in recent years.

Announcing the study, the Office of Fair Trading (OFT) said evidence it had gathered suggested insurance premiums in the UK had risen around 12% between 2009 and 2010.

The OFT said it was also reckoned that premiums had gone up by a further 9% in the first nine months of this year.

It added that a key factor in these increases had been a rise in the costs associated with personal injury claims.

However, the increased cost of third party non-injury claims, which include credit hire, replacement vehicles and third party vehicle repairs, were also factors which had had a notable impact.

The OFT said: "As a result of this work, the OFT has reasonable grounds for suspecting that there are features of the UK's private motor insurance market that restrict and distort competition relating to the provision of third party vehicle repairs and credit hire replacement vehicles to claimants."

The OFT suspects that several common practices in the private vehicle insurance field restrict consumer choice, make it easy for costs to spiral out of control or make it difficult to assess value for money.

"This in turn may contribute to car owners having to pay higher premiums," the OFT said.

The Government is seeking ways to ban referral fees - a practice that Justice Minister Jonathan Djanogly has condemned as "a racket".

Sonya Branch, the OFT's senior director of services, infrastructure and public markets, said: "Our call for evidence has enabled us to gather information swiftly and efficiently so that we can now focus on specific features of the market that we are concerned could be restricting or distorting competition.

"By carrying out a market study, we aim to clarify whether a market investigation reference to the Competition Commission is appropriate."

The OFT expects to complete its market study by the spring.