Exclusive pricing deals between motor insurers and price comparison websites will be banned, the UK competition regulator has said.
The Competition and Markets Authority (CMA) said such deals were preventing insurers from making their products available more cheaply elsewhere.
But the CMA has ruled out a cap on replacement car and repair charges which it originally favoured.
It has been criticised by some for ‘inaction’ following the inquiry.
The planned changes could reduce premiums by about £20 a year, the AA motoring organisation said.
But it questioned whether such a long inquiry was needed given it would make such a small difference to premiums.
Shopping around
The CMA and its predecessor have been studying the £11bn private motor insurance market since 2012, following a referral from the Office of Fair Trading (OFT). The inquiry is separate from new rules regarding whiplash claims. It believes that many of the 26 million private motorists in the UK are paying too much for their insurance.
Its research found most deals between insurers and price comparison websites called ‘price parity’ agreements were restricting competition and leading to higher car insurance premiums overall.
More than half of all new car insurance business goes through price comparison websites, and up to 90% of this was priced according to these deals.
The deals stop insurers offering their products more cheaply elsewhere, and again ultimately push up the price of insurance, the CMA found.
“They certainly help motorists look for the best deal, but we want to see an end to clauses which restrict an insurer’s ability to price its products differently on different online channels,” said CMA deputy panel chairman Alasdair Smith.
It has ordered the agreements to end, a move welcomed by the Association of British Insurers (ABI). This is likely to take effect by early next year, unless there is an appeal against the order from members of the industry.
However, it will still allow agreements that mean the price quoted by insurers on their own websites will never be cheaper than on a price comparison website.