Moody's warns OFT motor referral will "hurt profitability"

Moody's has warned that the Office of Fair Trading's (OFT) move to refer the private motor insurance market to the Competition Commission will "hurt profitability" and "create uncertainty".

Last week, the OFT's decision to refer motor was largely welcomed by the insurance industry.

But the credit rating agency cautioned that the commission's investigation - which could last up to two years - is "credit negative".

In a research note, Moody's associate analyst Helena Pavicic explained: "At a minimum it [the investigation] will create uncertainty for the industry and more significantly could result in lower motor premium rates.

"A reduction in revenue from lower premium would hurt