CMA motor insurance proposals are well balanced and should benefit customers
12th June 2014
Steve White, Chief Executive of the British Insurance Brokers’ Association (BIBA), has described proposed changes to the private motor insurance market by the Competition and Markets Authority (CMA) as ‘encouraging’ and ‘likely to be beneficial to consumers’. His comments were made following publication of the CMA’s Provisional decision on remedies.
Steve White said: “BIBA has long-argued that some practices in the motor market, such as anti-competitive parity agreements, are detrimental to customers.
“It is encouraging that the Competition and Markets Authority has been listening and the resulting proposals will be beneficial to consumers.”
Parity agreements, also known as most favoured nation clauses, are put in place by some comparison websites and restrict insurers and brokers from offering the same product cheaper anywhere else.
Graeme Trudgill, Executive Director at BIBA, who gave evidence at the previous Competition Commission hearings, added: “This is a well-balanced response from the CMA. 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 CMA took over from the Competition Commission in April 2014, continuing the investigation in to the private motor insurance market that had been started the year previous. In its two working papers which propose remedies for the motor insurance market, the CMA has also suggested:
• a cap on the charges passed to the insurer of an at-fault driver in an accident for the cost of providing a replacement vehicle to the non-fault driver, to more closely reflect the costs incurred and remove significant inefficiencies
• better information for consumers about their rights following an accident
• 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 PMI-related add-on products.
BIBA is broadly supportive of the five proposed measures and will be giving a full detailed response to the CMA by the 4th July deadline.
The CMA, will now consult on these measures before publishing the final decision of its independent group of members in September 2014.
These remedies will support BIBA's Manifesto call to action to tackle the cost of motor insurance. The BIBA-Acturis Insurance Price Index shows that for the second year in a row, motor insurance has dropped by around 5.5% in the first quarter.
Notes to editors
1. For further information please contact:
BIBA press office:
Leighann Forsyth, Head of Communications
07917 738 721
2. About British Insurance Brokers' Association
The British Insurance Brokers' Association (BIBA) is the UK's leading general insurance intermediary organisation representing the interests of insurance brokers, intermediaries and their customers.
BIBA membership includes just under 2,000 regulated firms having merged with the Institute of Insurance Brokers (IIB) in November 2011.
General insurance brokers contribute 1% of GDP to the UK economy and BIBA brokers employ more than 100,000 staff.
53% of all general insurance is sold by an insurance broker and they arrange 81% of all commercial insurance business.
Insurance brokers put the client’s interests first, providing advice, access to suitable insurance protection and risk management.
BIBA helps more than 400,000 people a year to access insurance protection through it’s Find a Broker service, both online and via the telephone.
BIBA is the voice of the industry advising members, the regulators, consumer bodies and other stakeholders on key insurance issues. BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards.