Replacement vehicle charges to be capped

12 June 2014

flooded-cars The cost of replacement vehicles given to drivers after an accident or act-of-God palavers are to be capped, in order to help lower motor insurance premiums.

Britain's competition watchdog (not actually a dog, but it would be lol if it actually was) claimed that the charges currently passed on to insurers are costing the consumer £180 million a year.

Other proposals by the Competition and Markets Authority include a ban on the price parity agreements between comparison websites and insurers. These agreements stop insurers from making their products available to consumers elsewhere more cheaply.

Simon Douglas, who is a director of AA Insurance, said: “The CMA’s recommendations could wipe perhaps a further £20 or so off the average premium."

“There remains considerable scope to reduce costs to a much greater extent by continuing to address the high burden still borne by car insurance customers of fraudulent whiplash claims, which was outside the remit of this inquiry.”

Which is one way of looking at it. However Alasdair Smith, chairman of the CMA private motor insurance investigation group, has chipped in with: “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. Through the measures we propose to introduce, we will address the problems that stem from those managing the non-fault accident claim having little or no incentive to keep costs down.”

The CMA has suggested that the Financial Conduct Authority looks into the sale of add-on products, as they're allowing people to be a bit cheeky.

Despite all of this, prices have finally been falling with premiums down 5.6% during the first quarter and 16.6% over 12 months, wiping £105 off the average cost of a comprehensive policy, which now stands at £531 according to the AA.

This is partly due to increased competition among insurers, and stuff like that.

TOPICS:   Travel   Insurance

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