The Competition and Markets Authority (CMA) have said that the cost of courtesy cars should be capped to push down car insurance premiums. The regulator said that replacement vehicles cost consumers as much as £180m a year through higher premiums. There should also be a ban on website deals which stop insurers offering lower product prices elsewhere, and No Claims Bonus information will also have to be clearer.
"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 that "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.
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 CMA has been studying the £11bn private motor insurance market following concerns raised by the Office of Fair Trading in September 2012. The report was welcomed by the British Insurance Brokers' Association (BIBA), "We have long-argued that some practices in the motor market, such as anti-competitive parity agreements, are detrimental to customers. [These] proposals will be beneficial to customers," said BIBA chief executive, Steve White.
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