THE UK motor insurance sector is in for a major shake up after the Competition and Markets Authority (CMA) yesterday revealed a range of measures to promote competition.
The CMA proposals included a ban on exclusivity deals between car insurance firms and price comparison websites, preventing the firms from offering lower prices elsewhere.
However, while this was welcomed by car insurers, there was disappointment from the industry that a proposal for a cap on high costs relating to courtesy car provision was scrapped.
Under the current system, the insurer of an at-fault car involved in any collision pays all the costs of the not-at-fault car insurer, with no limit on costs such as temporary replacement courtesy cars.
Critics of the current arrangement say this has raised premiums, with lack of incentive to keep costs down.
However, the CMA said it chose not to pursue a solution as it would require a significant change in the law, and suggested costs relating to the issue added only £3 on average to premiums.
The CMA also said consumers needed better information on no-claims’ bonuses, and recommended the Financial Conduct Authority look at add-ons to insurance policies.
The AA, which suggested the CMA measures could cut premiums by around £20 a year, said factors not included in the inquiry also needed addressing, such as the huge cost of fraud including fake whiplash claims, estimated to add up to £90 to premiums.