Watchdog to ban deals between car insurers

London - A British competition watchdog said on Wednesday it would ban agreements between price comparison websites and motor insurers that stop insurers from making their products available more cheaply on other online platforms.

Such agreements "had the effect of restricting competition and leading to higher car insurance premiums overall," the Competition and Markets Authority (CMA) said in the final report of its investigation into private motor insurance.

"There need to be improvements to the way price comparison websites operate," said Alasdair Smith, chairperson of the private motor insurance investigation group, adding the CMA expected the ban "to lead to greater competition between price comparison websites".

The CMA also recommended that the Financial Conduct Authority looked at how insurers tell customers about products sold as add-ons to car insurance policies.

Replacement car

It said the shortage of information on these additional products made it difficult for consumers to compare them and that the sale of no-claims bonus protection gave the watchdog "particular concerns".

But the CMA said it could not find a solution to the problem that the amount which at-fault insurers have to pay for temporary replacement cars provided to not-at-fault claimants is far greater than the cost.

The body said it had considered alternatives such as requiring the not-at-fault driver's insurance to cover the cost of the replacement car or capping the amount which could be recovered from the at-fault insurer for the replacement car.

But it said either of these solutions would require a change in the law, which was not necessary since the issue only caused an increase in the average motor insurance premium of £3 a year.