The UK competition regulator has announced that exclusive deals drawn up between motor insurers and price comparison websites will be banned.
The Competition and Markets Authority (CMA) said that ‘price parity’ agreements between price comparison websites and car insurers are restricting competition.
The regulator has been assessing the market following a referral from the Office of Fair Trading in 2012.
It said that deals made exclusive to any one site have prevented insurers from making these offers more widely available.
Consequently, these deals were responsible in part for pushing up car insurance prices higher than they should be.
The AA said that premiums could reduce by an average of £20 per year when the changes go ahead.
Alasdair Smith, the CMA Deputy Panel chairman and the chairman of the 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.
“We want to see an end to clauses which restrict an insurer’s ability to price its products differently on different online channels. We expect this to lead to greater competition between price comparison websites.”
The CMA has also suggested that the City regulator, the Financial Conduct Authority, should look into the techniques that insurers use to add products to insurance policies.
The no-claims bonus protection was particularly problematic, the CMA said, because little information was made available about how the add-on is priced and what benefits it offers.
Mr Smith said that insurers would be required to provide “much better information”.
“The way motor-insurance-related add-on products are sold makes it hard for customers to obtain the best value,” he added.
“We would like the FCA, as part of its ongoing work on insurance add-ons, to consider how drivers could be better informed in making their choices.”