THE use of price comparison websites when buying car insurance has rocketed in recent years, with drivers determined to counter the increasing costs of motoring by finding the cheapest deal.
But whilst this may appear beneficial on an individual basis, as motorists are able to find the best individual deal for them, it has interestingly been discovered that exclusive pricing deals between motor insurers and price comparison websites have actually led to higher car insurance premiums overall.
The Competition and Markets Authority (CMA), which has been studying the £11bn private motor insurance market since 2012, says the deals have actually prevented the insurers involved from making their products available more cheaply elsewhere.
More than half of all new car insurance business goes through price comparison websites, and up to 90 per cent were priced according to these deals.
Ordering the agreements to come to end, the move has been welcomed by the Association of British Insurers (ABI) and is likely to take effect by early next year.
As a result, the AA is predicting it could lead to premiums being reduced by about £20 a year.
“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, reflecting on the exclusive arrangements.
As specialists in handling car accident claims, our expert lawyers at Neil Hudgell Solicitors know all too well how the worry of every-increasing insurance premiums impacts on motorists, and people will be shocked to discover that deals for price-comparison websites have actually been leading to higher costs overall.
Even after drivers have suffered a serious personal injury, the cost of insurance, and the impact of any accident they have been involved in may have on their policies going forward, is always on their minds.
This recent inquiry has been separate from new rules regarding whiplash claims, but comes because there is a strong belief that many of the 26 million private motorists in the UK are paying too much for their insurance.
The CMA also recommended that the UK's financial regulator, the Financial Conduct Authority (FCA), should examine how insurers inform consumers about add-on products to car insurance policies, highlighting no-claims bonus protection as being particularly problematic, with both the price of this product and its benefits often unclear to consumers.