The private motor insurance market is a highly competitive and relatively commoditized market. However, there are still features of the market that restrict competition and inflate premium prices. The Competition Commission launched its investigation into the private motor insurance market in September 2012, and is required to publish its final report in September 2014.
Examine the regulatory changes that will happen in the private motor insurance market as a result of the Competition Commission investigation.
Gain insight into how the remedies proposed by the Competition Commission may affect the private motor insurance and aggregator markets.
Inform yourself on how and when the remedies proposed by the Competition Commission are likely to be implemented.
What are the issues identified by the Competition Commission investigation?
What are the remedies proposed by the Competition Commission to resolve the identified issues?
How will the proposed remedies impact the private motor insurance and aggregator markets?
If the proposed remedies for the separation of cost liability and cost control are implemented, non-fault claims for replacement vehicles would be incurred by the non-fault insurer, which would necessitate a change to how policies are underwritten.
One of the remedies proposed to improve the transparency of add-ons aims to list add-on information and pricing on aggregators. Listing add-ons on aggregators with full pricing information would increase competition in this space, leading to lower profit margins for insurers.
The prohibition of wide most favored nation clauses from aggregator-insurer contracts seems very likely to happen. This would increase competition between aggregators and lower barriers to entry into the aggregator market.