The insurance industry has reacted strongly against accusations made in a Channel 4 Dispatches programme last night that suggested insurers "maximise profit at the expense of doing what's best for the consumer" - but it conceded the market is in need of reform.

Direct Line Group, the Association of British Insurers and Ageas have rejected claims that insurers inflate the cost of car repairs payable by the at-fault party's insurer through the use of approved mechanics.

Direct Line said that its repair methods do not differentiate between ‘at fault' and ‘non fault' repairs.

"We categorically reject any suggestion that we manipulate costs to the detriment of our customers or the safety of their vehicles," it said in a statement.

"Our claims process also does not include the use of accident management companies. We operate a network of independently accredited repair centres, and our customers are also able to use any repairer of their choice."

The ABI responded that customers are insurers' top priority, adding that the industry can deliver only if it "effectively manages its claims costs", pointing out that managing costs has become "more important than ever".

"Insurers want to ensure good working relationships with repairers. It is not their intention to ‘squeeze' the sector, but to ensure the best value for their policyholders by paying a fair price for a fair repair," the organisation said.

Rob Smale, claims and operation director at Ageas Insurance, said that the practices referred to in the programme are not ones that Ageas "uses or condones".

He added: "We want to reassure our brokers and clients that we continue to promote the highest level of standards across our car repairers, using the most cost-effective and safe methods as approved by Thatcham, while offering customers the choice they want."

In a statement, the ABI conceded that the motor insurance market is in need of reform.

"Insurers operate in a dysfunctional market characterised by excessive costs associated with organisations such as claims management firms," the association said.

The Competition Commission released a statement of issues in early December outlining plans to investigate whether a lack of control over the supply of services to non-fault parties in accidents increases the costs of the services supplied.

The move followed an Office of Fair Trading referral of the private motor insurance market to the Commission for investigation last September.

The commission set out an investigation timetable with a statutory deadline of September 2014.

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