Plans for a crackdown on inflated motor insurance costs which would see an estimated £20 being shaved off the cost of a typical driver’s policy have been unveiled by the competition watchdog.
The Competition and Markets Authority (CMA) is proposing to cap the cost of providing a courtesy car following an accident after finding there is often “little or no incentive” to keep expenses down.
Replacement vehicles collectively cost consumers between £70 million and £180 million a year through higher premiums, the CMA found.
AA Insurance estimates from the CMA’s findings that, if they are put into place, the recommendations could potentially wipe around another £20 off the cost of the average motor insurance premium.
Premiums have already been tumbling in recent months amid wider Government moves to weed out bogus personal injury claims which have ramped up the cost of motor insurance generally.
According to an index run by AA Insurance, the average quoted premium for someone who shops around has already fallen by more than £100 over the last 12 months, to reach £531.
The CMA is also proposing that competition in the £11 billion private motor insurance market should be boosted by banning “price parity” agreements between comparison websites and insurers which block insurers from making their products available to consumers more cheaply elsewhere.
It said consumers should also be given clearer information about their rights following a motor accident and better explanations about the costs and benefits of taking out protection against their no claims bonus.
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