U.K. insurers should have a cap placed on the cost of replacement cars for drivers at fault for accidents to help reduce insurance premiums, the country’s Competition and Markets Authority said in a draft opinion today.
Insurers should give consumers better information about no- claims bonuses when they buy insurance and their rights after an accident, the watchdog said in a statement. Price-comparison websites shouldn’t restrict insurers from offering cheaper products elsewhere, the agency said.
The changes should increase competition in the car insurance market and reduce the costs passed on to consumers in insurance premiums, according to the watchdog. The competition authority found that the cost to consumers for providing replacement vehicles to claimants, who weren’t at fault in accidents, was £70 million ($118 million) to £180 million [$303 million] a year.
“There are over 25 million privately registered cars in the U.K. and we think these changes will benefit motorists who are currently paying higher premiums as a result of the problems we’ve found,” Alasdair Smith, CMA deputy panel chairman, said in the statement.
The 10-member FTSE 350 Nonlife Insurance index was up 0.6 percent at 9:17 a.m. in London.
The CMA said it is seeking responses from any interested parties to its proposed remedies by July 4 and will publish its final report by Sept. 27.
The proposals “support many of the recommendations that we have made to the Competition and Markets Authority and will help to enable a level playing field across the insurance market,” Steve Maddock, managing director of claims at Direct Line Insurance Group Plc, said in a statement.
The U.K.’s motor insurance market posted its first underwriting profit in two decades last year following a government ban on referral fees and an increase in reserve releases, Ernst & Young LLP said this week.