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New plans to reduce car insurance costs announced

The latest ideas will also be used to try to increase competition in the insurance market

Insurance clamdown

A number of new measures have been announced by the Competition and Markets Authority (CMA) in a bid to increase competition and lower prices for car insurance.

The plans include a cap on the charges passed to the insurer of an at-fault driver in an accident for the cost of providing a replacement vehicle to the non-fault driver, to more closely reflect the costs incurred and remove significant inefficiencies.

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Other changes put forward include better information for consumers about their rights following an accident, as well as better information for drivers on the costs and benefits of no-claims bonus protection.

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Alasdair Smith, chairman of the private motor insurance investigation group and CMA deputy panel chairman, said: "There are over 25 million privately registered cars in the UK and we think these changes will benefit motorists who are currently paying higher premiums as a result of the problems we've found.

"A cap on replacement vehicle costs will reduce the amounts charged to insurers of at-fault drivers, which will cut out some of the inefficiencies in the system and feed through to reduced premiums for all drivers."

Finally, the CMA is calling for a ban on price parity agreements between price comparison websites and insurers which stop insurers from making their products available to consumers elsewhere more cheaply.

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Steve White, Chief Executive of the British Insurance Brokers’ Association (BIBA), said: "BIBA has long-argued that some practices in the motor market, such as anti-competitive parity agreements, are detrimental to customers.

“It is encouraging that the Competition and Markets Authority has been listening and the resulting proposals will be beneficial to consumers.”

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