Auto insurance industry in the UK could bring comparison sites to an end

auto insurance car headlights

This could cause a considerable shakeup, all stemming from a report published by a watchdog.

The types of exclusive auto insurance deals that have been established between insurers in the United Kingdom and price comparison websites could soon be eliminated following the ruling of a competition regulator within that country that decided that these deals were not helping drivers and should, therefore, be prohibited.

The decision of the regulator was one among several measures recommended made by a watchdog report.

The Competition and Markets Authority produced an auto insurance report, for the private market that is estimated to be worth £11 billion in the country. The report indicated that some of the contract clauses for price parity between car insurance companies and the price comparison websites make it so that those providers are actually unable to offer those products for a less expensive price on other online platforms. As a result of this, said the report, this practice is actually holding back competition and is driving coverage premiums up, as a whole.

The report indicated that overall auto insurance prices are actually higher because of the discount deals for those websites.

proof of auto insuranceAccording to the private motor insurance investigation group chairman, Alasdair Smith, “There need to be improvements to the way price comparison websites operate.” He added that while these websites certainly provide drivers with helpful tools for searching for a lower price for their coverage, “this in turn has led 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 on different online channels. We expect this to lead to greater competition between price comparison websites.”

This report, which brings a two year investigation by the Competition and Markets Authority (CMA) – as well as by its predecessor, the Competition Commission – to a close, but it also did not manage to reach the level of recommendation that had been called for by many, with regards to those issues that could be leading to the biggest impact on the insurance premiums paid by drivers.

Among those issues was a previous recommendation made by the CMA, earlier this year, which suggested that it would be worthwhile to cap the cost associated with a courtesy car provided after a crash, when that organization determined that there was very little motivation for insurers to reduce this cost as a result of a division between those who arrange for that vehicle and those who actually pay for it.

Related posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.