Great news for motorists – the Competition and Markets Authority is going to ban exclusive pricing deals between motor insurers and price comparison websites. Why is that good news? It could cut the cost of a typical policy by £20, experts reckon.
The CMA revealed this morning the results of a three year investigation into the £11bn motor insurance market.
It criticised the cosy pricing deals and warned that they prevented insurers from selling their policies more cheaply elsewhere.
More than half of all new car insurance business goes through price comparison websites, and up to 90 per cent of it is priced according to the restrictive deals.
“There needs to be improvements to the way price comparison websites operate,” said Alasdair Smith, the CMA’s deputy panel chairman. “They certainly help motorists look for the best deal, but we want to see an end to clauses which restrict an insurer’s ability to price its products differently on different online channels.”
It has ordered the agreements to end which is likely to happen by early next year, unless there is an appeal by the industry.
Steve White, chief executive of the British Insurance Brokers’ Association, welcomed the ban. He said: “We are pleased that the CMA is outlawing anti-competitive ‘wide’ most favoured nation (MFN) parity clauses as these are detrimental to customers.”
But the insurance industry criticised the CMA for not introducing price controls on the cost of courtesy cars for drivers involved in accidents, a move that had been widely expected.
James Dalton, head of motor insurance at the Association of British Insurers, said: “The fact that the report fails to do anything to address the excessive costs of replacement vehicles – a problem that the CMA itself identified – will be a bitter pill to swallow for honest motorists.”
Meanwhile Janet Connor, managing director of AA Insurance, 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.”
Nice on but However, it is important to check the downsides of opting for the cheap car insurance and understanding why it may not be the best for your car.ReplyDelete