The UK’s Competition and Markets Authority (CMA) has released a number of changes it proposes to make in the private motor insurance (PMI) market to increase competition and reduce the cost of premiums for motorists.
The measures include a cap on the costs of replacement vehicles, improved information for consumers about their rights following an accident and the costs and benefits of no-claims bonus protection, a ban on price parity agreements between price comparison websites (PCWs) and a recommendation that the Financial Conduct Authority (FCA) looks at how insurers inform consumers about other PMI-related add-on products.
Alasdair Smith, chair of the private motor insurance investigation group and CMA deputy panel Chair, 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.
“A cap on replacement vehicle costs will reduce the amounts charged to insurers of at-fault drivers, which will cut out some of the inefficiencies in the system and feed through to reduced premiums for all drivers. Through the measures we propose to introduce, we will address the problems that stem from those managing the non-fault accident claim having little or no incentive to keep costs down.
“There also need to be improvements to the way price comparison websites operate. We believe they are great in helping motorists look for the best deal, and this in turn has driven insurers to compete more intensely, but we want to see an end to clauses which restrict an insurer’s ability to price its products differently, whether on different price comparison sites or on other channels.
“We also find that the way motor insurance-related add-on products are sold makes it hard for customers to obtain the best value. We would like the FCA, as part of its on-going work looking at add-ons across all insurance products, to consider how drivers could be better informed in making their choices. We find that there are particular problems in relation to no-claims bonus protection, where both the price of this product and its benefits are often unclear to consumers, and we believe insurers should provide much better information about it.”
Competition and Markets Authority, Europe, Alasdair Smith
