Competition watchdog ‘wasted millions’ in motor insurance market probe

Competition and Markets Authority under fire for wasting taxpayer money in 'pointless' probe

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The Independent Online

Britain's competition watchdog has been accused of wasting “millions of pounds” of taxpayers’ money as it unveiled the results of a lengthy probe into the £11 billion motor insurance market.

The Competition and Markets Authority said it planned to clamp down on the cosy relationship between insurers and price comparisons websites in a move experts claimed could knock about £20 off the price of a typical policy.

However, it backtracked on proposals to cap the cost of courtesy cars for drivers involved in accidents.

James Dalton, head of motor insurance at the Association of British Insurers, said: “Today’s report is the culmination of three years of work and has cost taxpayers millions of pounds. The fact that it fails to do anything to halt the excessive costs of replacement vehicles — a problem the CMA itself identified — will be a bitter pill to swallow for honest motorists.”

Others claimed the CMA, formed by a merger of the Competition Commission and Office of Fair Trading last year, had focused on the wrong issues.


Janet Connor, managing director of AA Insurance, said: “We welcome any measures to contain consumer costs and improve transparency, but there remains much greater scope to reduce costs by continuing to tackle the tide of insurance fraud. For example, attempts to exaggerate or make false whiplash injury claims cost up to £90 per policy. This remains a considerable burden on insurance companies but it was outside the remit of this enquiry.”

The regulator plans to introduce a ban on so-called price parity clauses between comparison websites and insurers, which prevent insurers from offering products cheaper elsewhere. The Financial Conduct Authority is carrying out a separate investigation into the market for car insurance add-on products. “There must be improvements to the way price comparison websites operate,” said Alasdair Smith at the CMA.