Five Questions On: Car insurance changes


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What now? Should we expect more increases in the cost of cover?

It’s the opposite: the Competition and Markets Authority (CMA) is going to ban exclusive pricing deals between motor insurers and price-comparison websites. That could cut the cost of a typical policy by £20, experts reckon.

Hang on, I thought price-comparison sites had brought down prices? 

Not so. The comparison sites now have so much power, they can negotiate special prices – and the CMA has said that the cosy pricing deals have stopped insurers from selling their policies more cheaply elsewhere. “There needs to be improvements to the way price-comparison websites operate,” said Alasdair Smith at the CMA. “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.”

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.

So will the ban start right away? 

It is likely to happen by early next year, unless there is an appeal by the industry.

Is there likely to be an appeal? 

That’s doubtful. Steve White, chief executive of the British Insurance Brokers’ Association, said: “We are pleased that the CMA is outlawing anti-competitive “most favoured nation” parity clauses as these are detrimental to customers.”

So everyone’s happy? 

Insurers were disappointed that the CMA failed to introduce price controls on the cost of courtesy cars for drivers involved in accidents. James Dalton of the Association of British Insurers said: “The failure to do anything to address the excessive costs of replacement vehicles will be a bitter pill to swallow for honest motorists.”

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