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Replacement car charges capped in move to bring insurance premiums down
Watchdog acts to put car premiums into reverse
(about 20 hours later)
The cost of replacement vehicles given to drivers after accidents is to be capped to cut motor insurance premiums.
The cost of replacement vehicles given to drivers after accidents is to be capped in an attempt to bring down motor insurance premiums.
Britain’s competition watchdog claimed that the charges currently being passed on to insurers are costing consumers £180 million a year as it unveiled the latest pack of measures to reform the £11 billion private motor insurance market.
Britain's competition watchdog claimed yesterday that the charges currently being passed on to insurers are costing consumers £180m a year, as it unveiled the latest pack of measures to reform the £11bn private motor insurance market.
Other proposals by the Competition and Markets Authority include a ban on so-called price parity agreements between comparison websites and insurers. These agreements stop insurers from making their products available to consumers elsewhere more cheaply.
Other proposals by the Competition and Markets Authority (CMA) include a ban on so-called price parity agreements between comparison websites and insurers. These prevent insurers from making their products available to consumers more cheaply elsewhere.
Simon Douglas, director of AA Insurance, said: “The CMA’s recommendations could wipe perhaps a further £20 or so off the average premium.
The CMA recommended the Financial Conduct Authority, the City regulator, looks further into the sale of add-on products alongside home and motor policies, credit cards and even holidays.
“There remains considerable scope to reduce costs to a much greater extent by continuing to address the high burden still borne by car insurance customers of fraudulent whiplash claims, which was outside the remit of this inquiry.”
Despite all of this, prices have finally been falling in motor insurance. Premiums were down 5.6 per cent during the first quarter and 16.6 per cent over 12 months, wiping £105 off the average cost of a comprehensive policy, which now stands at £531, according to the AA.
Alasdair Smith, chairman of the CMA private motor insurance investigation group, 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.
This is partly due to increased competition among insurers. Simon Douglas, the director of the AA's insurance arm, said: "The CMA's recommendations could wipe perhaps a further £20 or so off the average premium."
"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.”
He added: "There remains considerable scope to reduce costs to a much greater extent by continuing to address the high burden still borne by car insurance customers of fraudulent whiplash claims, which was outside the remit of this inquiry."
The CMA recommended the Financial Conduct Authority looks further into the sale of add-on products, which are usually sold alongside home and motor policies, credit cards and even holidays.
Despite all of this, prices have finally been falling with premiums down 5.6 per cent during the first quarter and 16.6 per cent over 12 months, wiping £105 off the average cost of a comprehensive policy, which now stands at £531 according to the AA. This is partly due to increased competition among insurers.
