Insurers and price comparison websites are to be banned from having agreements that stop car insurance being available more cheaply on other online platforms according to a report into the competitiveness in the car insurance market.
The Competition and Markets Authority (CMA) has published measures that it expects will increase competition in the car insurance market and reduce the cost of premiums for drivers.
Its report into the private motor insurance market found that some price parity clauses in contracts between price comparison websites and motor insurers prohibited insurers from making their products available more cheaply on other online platforms.
In addition, it said there was a limited provision of information in the sale of motor insurance add-on products making it difficult for consumers to compare the costs and benefits of their products – in particular the sale of no-claims bonus protection giving rise to particular concerns.
As a result, there will be better information for consumers on the costs and benefits of no-claims bonus protection as well as the ban on price parity clauses that stop the availability of cheaper products. The CMA also recommended that the Financial Conduct Authority looks at how insurers inform consumers about other products sold as add-ons to car insurance policies.
The CMA suggested that the measures could knock around £20 off the cost of a typical policy. However, AA Insurance’s managing director Janet Connor pointed out that around £200 had already been wiped off the average quote for a comprehensive motor policy since the end of 2011.
She said: “While of course we welcome any measures that help to contain consumer costs and improve transparency, there remains much greater scope to reduce costs by continuing to tackle the tide of insurance fraud. For example, attempts to exaggerate or make false whiplash injury claims cost up to £90 per policy. This remains a considerable burden on insurance companies but it was outside the remit of this enquiry.”
