The use of exclusive pricing deals between insurance companies and comparison websites has been banned after a ruling from The Competition and Markets Authority (CMA) suggested the deals were preventing insurers offering consumers the best deal.
The findings on the private motor insurance market come as part of a wider inquiry by the CMA being conducted since it took over the role of the Competition Commission earlier this year. Its brief to examine a variety of markets looking at whether existing practices have an adverse effect on competition.
As well as a ban on the agreements with price comparison websites, the CMA has also called for better information to be given to consumers on the costs and benefits of no-claims bonus protection. It has also recommended that the Financial Conduct Authority (FCA) take a look at how insurers inform consumers about the wide range of add-ons now offered with most car insurance policies.
The CMA has also been critical of the post-accident process employed by insurance companies, suggesting cost efficiencies could be achieved, bringing down insurance premiums for consumers. In particular the CMA revealed that the cost to at fault insurers of temporary replacements cars provided to not-at-fault claimants was considerably more than just the actual cost of the service itself. However, the CMA concluded that regulating this directly would prove too difficult to administer.
Alasdair Smith, Chairman of the private motor insurance investigation group and CMA Deputy Panel Chairman, said:
“There are over 25 million privately registered cars in the UK and we think these changes will benefit motorists who are currently paying higher premiums as a result of the problems we’ve found.”
We have looked very hard at resolving the problem with the cost of post-accident services to drivers who are not at fault in an accident, in particular temporary replacement cars. Reluctantly we have had to conclude that we cannot see an effective way of addressing this problem fully, short of a fundamental change in the law and, whilst this problem does increase premiums for motorists, the extent of the problem is not as high as was at first envisaged and does not warrant such a radical measure.”
The issue regarding replacement cars however is likely to be monitored with many motoring groups and consumer groups keen to ensure motoring costs come down rather than increase.