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