New regulations are looking at the relationship between motor insurance providers and price comparison sites.
Whilst most consumers believe that price comparison sites will enable them to find the cheapest, most effective deal for their situation, the case is often quite different.
The Competition and Markets Authority (CMA) has looked into pricing deals and concluded that price comparison websites have amassed so much power that they have been able to negotiate on pricing strategies with insurance providers, and stop them from selling the policies cheaper anywhere else.
This means that although you are seeing the cheapest prices on the market, these are not the cheapest the prices could be. Comparison sites have been artificially driving up the price of policies by using their audience size and fan base as a negotiating tool.
The CMA has said they will ban any exclusive pricing deal between the two, which should start to affect (bring down) the overall costs of many policies. It will also stimulate a greater degree of competition between policy providers who must be more competitive with each other, rather than relying on the price comparison sites to dictate rates.
The comparison industry is likely to want to try to appeal and reverse any potential bans, but if their cries go unheard, the ban will come into effect early in 2016.
Experts from inside the insurance provision industry are suggesting that there may not be an appeal from insurance providers, who have always wanted to do the right thing by their customers, but had no option but to acquiesce to the comparison site power in the market.
Whilst this will be good news for motorists, people are still unhappy about several unaddressed problems surrounding replacements vehicles and premiums paid on these. The CMA has not looked at all the issues it suggested t would, but it looks to be a good start.
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