The Competition and Markets Authority (CMA) has set out a number of proposed changes to the private motor insurance sector that it says will help reduce the cost of premiums.
Among the measures, the CMA wants a cap on the charges passed to the insurer of an at-fault driver for the cost of replacement vehicles; clearer information for consumers about their rights following an accident; a ban on price parity agreements between price comparison websites and insurers; better information for consumers on the costs and benefits of no-claims bonus protection; and the Financial Conduct Authority (FCA) to examine how insurers inform consumers about other motor insurance-related add-on products.
Alasdair Smith, chair of the private motor insurance investigation group and CMA Deputy Panel Chair, said that there were over 25 million privately registered cars in the UK and that its recommended changes would help benefit many of them.
Steve White, the chief executive of the British Insurance Brokers’ Association (BIBA), said that CMA’s report was encouraging.
“BIBA has long-argued that some practices in the motor market, such as anti-competitive parity agreements, are detrimental to customers,” he said.
His colleague Graeme Trudgill, executive director at BIBA, called it a well-balanced response.
“If a customer walks into a broker’s office, we believe they should be able to offer the premium at a cheaper price than on a comparison site which typically charges around £40 to £50 per lead,” he said.
Lawyers also lined up to praise the CMA’s recommendations. David Johnson, the president of the Forum of Insurance Lawyers (FOIL) said that the organisation was pleased that the CMA was pushing for a level playing field between insurers competing in this market and with the drive to improve the information available to premium payers when choosing between different products.
“In our view, as well as the CMA, Government has an important part to play in achieving a significant and sustained reduction in private motor insurance premiums, through initiatives to address fraud, the problems around credit hire and improved medical reporting in respect of whiplash claims,” he said.