Proposals to cap courtesy car costs and lower insurance premium costs unveiled by Competition and Markets Authority

British Motorists were given a huge boost today as proposals were announced by the industry competition regulator to cap the overpriced charges that insurers levy on customers for courtesy cars. 
The Competition and Markets Authority (CMA) have unveiled plans for an initiative which will seek to reduce the costs that consumers pay on their insurance premiums by bringing an end to insurers intentionally raising the amount their innocent customers have to pay on repairing and hiring their car; a practice which then results in the added costs being passed onto the guilty driver as well. 
Such activity from insurers as raised the amount their customers play on replacing their car by as much as £1,000 when gauged against how much a motorist would have been required to pay if their insurer had taken liability for the cost of car hire themselves.
And the unacceptable reality that this practice has adversely affected both at-fault and innocent motorists will be finally addressed by the CMA, who have seen their announcement met with widespread acclaim for its altruistic and honest approach. 
“A cap on replacement vehicle costs will reduce the amounts charged to insurers of at-fault drivers, which will cut out some of the inefficiencies in the system and feed through to reduced premiums for all drivers,” said Alasdair Smith, chair of the private motor insurance investigation group and CMA deputy panel chair.
He added: “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.”
Lower costs; wider significance
It is estimated that the overall savings consumers will enjoy from the measures will only be around £5, though it is the reality that the move is expected to be part of a series of initiatives to clamp down on the motor insurance market and reduce costs for drivers that gives the news a far wider significance.
Payment of referral chargers to personal injury solicitors has already been outlawed by the government and is estimated to be shaving legal costs that consumers have to pay on smaller compensation claims in half.
The CMA has signalled their intention to instigate a ban on price parity arrangements between product comparison sites and insurers, which prevents the latter from offering cheaper versions of their product outside of the stated price on the comparison site. 
The competition watchdog also said it intends to impose a ban on price parity agreements between price comparison websites and insurers, which stop insurers from making their products available to consumers elsewhere more cheaply.
“We believe they price comparisons websites are great in helping motorists look for the best deal, and this in turn has driven insurers to compete more intensely, but we want to see an end to clauses which restrict an insurer’s ability to price its products differently, whether on different price comparison sites or on other channels,” said Smith.
The CMA has also suggested that the Financial Conduct Authority begin an investigation into the informational practice between insurers and consumers; particularly in regards to add-ons on private motor insurance. The calls have been driven by previous findings that indicated how difficult it can be for individuals seeking to ascertain the most competitive valued add-on products across the market. 
At present, the CMAís plans are only in their provisional stage and it is thought that after an in-depth con siltation with all notable parties this summer, that they will publish their final initiatives in September this year. 
The Association of British Insurers have praised the CMA for their announcement of the provisional measures, arguing that if they are instigated in reality they will “help to reduce some of the unnecessary costs that insurers face and help lower premiums for motorists”.
They added that prior initiatives, including the new regulations being implemented to address whiplash claim problems, have led to a 14% fall in the costs of the average comprehensive motor premium in the last 30 months. 
Advice for motorists 
In the internet era, it can be argued that it has never been easier for consumers to find the most competitive deal for any area of their expenditure, particularly with the emergence of a multitude of comparison sites across the web which make it simple to evaluate and ascertain the best price for any products on the market. 
The CMA should be commended for highlighting the link that certain comparison sites and insurers share when it comes to product promotion and customer exploitation, and hopefully the introduction of measures to break this trend and ensure comparison sites function for the benefit of consumers will succeed in its endeavour to clean up the market. 
Furthermore, recent statistics have suggested that auto-renewing has meant that thousands of motorists have overpaid on their car insurance each year, when visiting a comparison site and following a few simple steps can lower car premiums by hundreds each year.
If your car insurance is about to expire then it strongly advised that you shop around and find the best deal to reflect your current driving status and circumstances, and only agree to pay for added aspects of your insurance that you believe you will need. 
And if you ensure you do this and the CMA deliver on their proposals to make the market cheaper and more consumer orientated, then life as a motorist could be made far easier for you in the future as the UK continues its 2014 revolution to putting power back into consumer hands and away from servicers and other financial authorities who have abused their power and exploited prices for too long now. 


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