According to data from the AA’s British Insurance Premium Index the “shoparound average” for car insurance quotes rose by 40% for the year to 31 March.
The OFT is calling for evidence to establish a clear picture of the market and the reasons behind any increase, and whether there are any consumer or competition issues that need to be addressed to improve the functioning of the market.
It will be looking at the role of price comparison sites and the ancillary products that are sold by insurance companies as part of the initial scrutiny.
The OFT will gather evidence over the next five weeks and plans to publish findings in December, any further investigation will depend on what is uncovered.
The European Union recently ruled that gender discrimination must be removed for car insurance products. The ruling came into force after the period the OFT is scrutinising.