Car insurance industry faces shake-up

Exclusive pricing deals between insurance companies and comparison websites will no longer be allowed, following a ruling by the Competition and Markets Authority (CMA).

The CMA claims that these kind of deals were preventing insurers from offering their products available elsewhere more cheaply.

Following the inquiry, the CMA has also called for better information for consumers on the costs and benefits of no-claims bonus protection.

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However, the CMA has ruled out placing a cap on the price of a replacement car and repair charges, which it originally was in favour of.

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.

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“There need to be improvements to the way price comparison websites operate. They certainly help motorists look for the best deal, and this in turn has led insurers to compete more intensely, but we want to see an end to clauses that restrict an insurer’s ability to price its products differently on different online channels. We expect this to lead to greater competition between price comparison websites.”

The changes could help reduce premiums by up to £20, according to the AA. However, the CMA has been criticised over the length of the inquiry and the fact that it has brought about such small gains.