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Car insurance market faces overhaul Car insurance market faces overhaul
(36 minutes later)
Price parity clauses in contracts between motor insurers and price comparison websites should be banned, the UK competition regulator has said. Exclusive pricing deals between motor insurers and price comparison websites should be banned, the UK competition regulator has said.
The Competition and Markets Authority (CMA) said such deals were preventing insurers from making their products available more cheaply elsewhere.The Competition and Markets Authority (CMA) said such deals were preventing insurers from making their products available more cheaply elsewhere.
It also said consumers needed better information on no-claims bonus protection insurance.It also said consumers needed better information on no-claims bonus protection insurance.
It is the CMA's final report into the private motor insurance market.It is the CMA's final report into the private motor insurance market.
The CMA has been studying the £11bn market for more than a year, following a referral from the Office of Fair Trading (OFT).The CMA has been studying the £11bn market for more than a year, following a referral from the Office of Fair Trading (OFT).
Its research found price parity clauses between price comparison websites and motor insurers were restricting competition and leading to higher car insurance premiums overall. Its research found the deals between insurers and price comparison websites called "price parity" agreements were restricting competition and leading to higher car insurance premiums overall.
The deals stop insurers offering their products more cheaply elsewhere, and again ultimately push up the price of insurance, the CMA found.
"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," said CMA deputy panel chairman Alasdair Smith.
The CMA also said the UK's financial regulator, the Financial Conduct Authority, should examine how insurers inform consumers about add-on products to car insurance policies.
"The way motor insurance-related add-on products are sold makes it hard for consumers to obtain the best value," Mr Smith added.
The CMA said no-claims bonus protection was particularly problematic, with both the price of this product and its benefits often unclear to consumers.
"We are requiring insurers to provide much better information," it said.
However, the CMA said it had been unable to find a way to resolve the issue of high car hire and repair charges for drivers not at fault in an accident.
It said addressing the issue would require a "fundamental change in the law". The CMA said its research found the extent of the problem was not as high as it first envisaged, meaning "it does not warrant such a radical measure".