Car insurers not on price comparison websites

  • Industry watchdogs: Some comparison websites make deals with insurers to get exclusive price, making their site cheapest for certain product
  • Secretive nature of deals means customers who unknowingly visit other comparison websites – which still claim to offer best prices – will pay more

Price comparison websites may seem like the perfect way to shop around for an insurance policy – providing an unbiased breakdown of all the best deals.

But the websites – which allow customers to compare a range of different quotes – were exposed as a sham yesterday, as many prices offered for motor insurance are being unfairly restricted by secret agreements.

Industry watchdogs claim some comparison websites make deals with insurers to get an exclusive price, making their website the cheapest for a certain product.

The secretive nature of these deals means customers who unknowingly visit other comparison websites – which all still claim to offer the best prices – will pay more.

Watchdogs even found evidence that some websites threaten to blacklist insurance companies if they do not agree to exclusive deals - resulting in huge loss of business for the firms. Both moneysupermarketand confused(above) said they do not believe that the deals 'are necessary for their business model'

Consumer lawyers predict the crackdown on comparison websites’ prices for car insurance will be just the start – with deals on other types of insurance, as well as flights, hotels and other products likely to be scrutinised under EU competition law.

Watchdogs even found evidence that some websites threaten to blacklist insurance companies if they do not agree to exclusive deals – resulting in huge loss of business for the firms.

The Competition and Markets Authority (CMA) has announced it will ban these agreements – known as ‘most favoured nation’ deals – which mean an insurance firm can only offer its cheapest price to a single price comparison website.

Such deals have the effect of ‘suppressing competition on price’ and are ‘likely to lead to higher private motor insurance prices overall’, the watchdog concluded.

Its report notes: ‘We received anecdotal evidence from insurers that price comparison websites have threatened to de-list private motor insurers if they do not get the best price.’

One unnamed insurer told the watchdog: ‘We have been advised that if we present cheaper prices on a rival price comparison website that this may be considered that we are not offering their customers the best proposition, and they would consider whether we were an appropriate partner.’

The proposed ban will affect comparison sites which generate more than 300,000 insurance sales a year.

It is part of a clampdown on the motor insurance industry aiming to outlaw rip-off practices that fleece drivers by more than £200million a year and add around £10 to the average premium.

It follows a two-year investigation, and aims to help cut costs for all drivers in the £11billion private motor insurance market.

The watchdog contacted the biggest price comparison websites, comparethemarket.com, confused. com, gocompareand moneysupermarket.com.

Comparethemarket.com, famous for its meerkat mascots, staunchly defended its use of the contracts, saying its ‘agreements with insurers and brokers were exempt under EU competition law’.

The website also argued it was important to its business model to be able to claim truthfully that its search results represent the best prices available on the internet – and that the special deals were ‘a key means of securing this end’.

Both moneysupermarketand confusedsaid they do not believe that the deals ‘are necessary for their business model’, but only moneysupermarketexplicitly said it did not use them.

The watchdog said less restrictive deals between a single insurer and a single website – which do not prevent the insurer agreeing separate deals with other comparison websites – will still be allowed.

Alasdair Smith, the CMA’s deputy panel chairman, warned: ‘There need to be improvements in the way price comparison websites operate.’

The watchdog will consult on the plans before publishing a final decision in September.

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