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| Car insurance market faces overhaul | Car insurance market faces overhaul |
| (about 1 hour later) | |
| Exclusive pricing deals between motor insurers and price comparison websites will 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 planned changes could reduce premiums by about £20 a year, the AA motoring organisation said. | |
| It questioned whether such a long inquiry was needed given it would make such a small difference to premiums. | |
| Shopping around | |
| The CMA and its predecessor have been studying the £11bn market since 2012, following a referral from the Office of Fair Trading (OFT). The inquiry is separate from new rules regarding whiplash claims. It believes that many of the 26 million private motorists in the UK are paying too much for their insurance. | |
| 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. | 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. | 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. | "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. |
| It has ordered the agreements to end, a move welcomed by the Association of British Insurers (ABI). This is likely to take effect by early next year, unless there is an appeal against the order from members of the industry. | |
| Courtesy cars | |
| The CMA also recommended that the UK's financial regulator, the Financial Conduct Authority (FCA), 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 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. | 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. | "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. | 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. |
| Premiums are pushed up because the insurer of a driver who was not to blame in an accident arranges for a replacement car or repair, but the at-fault driver's insurer foots the bill. | |
| 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 - amounting to an average increase on premiums of only £3 a year - meaning "it does not warrant such a radical measure". | |
| This conclusion was a relief for the Credit Hire Organisation (CHO), which represents companies that provide temporary replacement vehicles. | |
| "We welcome the fact that, after a three-year investigation, the CMA has concluded that non-fault customers do indeed require our assistance in their hour of need, and their legal right to a replacement vehicle while their car is off the road has again been reinforced," said Martin Andrews, director general of the CHO. | |
| What is your experience of buying car insurance? Do you think comparison website deals should be banned? Get in contact by emailing haveyoursay@bbc.co.uk |