On 24 September, the Competition and Markets Authority (CMA) published its final report on the private motor insurance market investigation. The CMA has found that the separation between the liability for costs and the control of costs in the handling of non-fault drivers' claims, in combination with various practices in the industry, cause inefficiencies in the supply chain, leading to higher car insurance premiums. However, the CMA has concluded that none of the remedies that it proposed would be effective or proportionate in addressing the adverse effects on competition identified.

The CMA investigated several possible options, such as having the not-at-fault driver’s insurance cover the cost of the replacement car or capping the amount which could be recovered from an at-fault insurer, but found that these remedies would require a significant change in the law, which was not warranted since the problem caused an increase in the average premium of only £3 per year.

The final report includes the following measures that the CMA expects to increase competition in the motor insurance market and reduce the cost of premiums for drivers:

  • A ban on agreements between price comparison websites and insurers which stop insurers from making their products available more cheaply on other online platforms.
  • Better information for consumers on the costs and benefits of no-claims bonus protection.
  • A recommendation that the Financial Conduct Authority (FCA) looks at how insurers inform consumers about other products sold as add-ons to car insurance policies.

The CMA’s remedy implementation timetable indicates that the draft final order will be issued for consultation early next year with the aim of finalising the order in February or March 2015.

For further information:
CMA final report on private motor insurance market investigation