It is reported that the planned changes could reduce car insurance premiums by as much as £20 a year.
The criticism is about the way the contracts are worded between the insurance comparison websites and the insurers and brokers that appear on them. The contracts usually include a clause prohibiting the insurers showing a cheaper price elsewhere, either on another price comparison website or even on their own sites!
This is tantamount to blackmailing the insurers as their contract could be broken if they offer a cheaper insurance quote anywhere else. If you liken it to Tesco, Asda, Morrisons and so on saying to Heinz that they must not sell their beans any cheaper elsewhere then imagine what would happen to our grocery bills, they would skyrocket.
One insider told me a different but very telling story. The big price comparison sites actually run car insurance quotes through on their competitors sites such as Compare The Market, GoCompare, MoneySupermarket and Confused to ensure that their insurers are NOT offering cheaper prices elsewhere. This is scandalous. Contrast it to the supermarkets who perform a similar exercise and then reduce their prices to match or better the competition.
There are some insurers who are now risking their contracts and challenging the insurance price comparison sites by offering a discount if their customers come direct to them rather than through a price comparison site. The fee for using a comparison site is paid by the insurance company or broker and therefore of course by the insured and can be anything from £35 to over £100 for each and every policy.