Your car insurance premiums could be set to get cheaper although you may have to search harder to find the best deal.
Car insurance ‘price war’ set to start – although you may have to hunt harder for the best deal image
That’s likely to be the result of changes announced by the UK’s competition regulator which will allow insurers to offer special deals through price comparison websites.
With insurers now being able to offer different rates through different websites, you may have to access a range of comparison services in order to find the very best deal. Keep reading to find out more.
Why you may have to access multiple comparison sites for the best deal
As it stands, most price comparison websites use ‘aggressive’ tactics to ensure that they can offer the best deals, effectively insisting that you cannot get a cheaper price through a rival website or broker.
However, according to the UK’s competition regulator, the Competition and Markets Authority, the side-effect of this approach has been to keep premiums higher than they could be.
Now, the watchdog has announced that it intends to ban these ‘price parity’ agreements. This is likely to result in fierce competition between some of the major price comparison websites which will want to strike deals with insurers so they can boast the lowest rates.
James Daley, founder of Fairer Finance, a consumer website, said: “The end result for customers will be that it’s more important than ever to visit multiple comparison sites when you’re shopping around for your insurance.
“Although it already makes sense to use more than one site – as some insurers don’t appear on certain comparison sites – the new rules will mean that you will now get different prices for the same insurer depending on which site you use.
“The bad news for consumers is that if you’re hell bent on getting the very best price, you’ll need to work harder than before. What we need now is a comparison site of comparison sites.”
The change to the rules is set to be particularly beneficial to those insurers who own all or part shares of the comparison sites – such as esure which owns 50 per cent of Go Compare.
“These comparison sites will now be able to offer cheaper prices for their own insurance brands on their own comparison sites – without being threatened with removal from their rivals,” Mr Daley said.
Regulator should also have allowed insurers to offer better prices direct and through brokers
While the rule changes may result in lower premiums, industry experts believe that the regulator should also have allowed insurers to offer better prices to customers who go direct to their website or who apply for insurance through a broker.
Simon Douglas, director of AA Insurance, said: “This measure should support competition. However, I believe that should have banned agreements that prevent insurers from offering cheaper premiums on their own websites. This would have had a much greater impact on reducing premiums for many customers and is a missed opportunity.”
Graeme Trudgill, director of the British Insurance Brokers’ Association, said: “If a customer walks into a broker’s office, we believe they should be able to offer the premium at a cheaper price than on a comparison site which typically charges around £40 to £50 per lead.”
The proposals made by the CMA are the result of a year-long study into the insurance market. The regulator has also proposed that insurers provide better information about no-claims bonus protection and drivers’ rights following an accident. They have also proposed to introduce cap on charges passed to the insurer of an ‘at-fault’ driver, which could help lower premiums.