Compare the Market home insurance deals could deny people better prices

Compare the Market home insurance deals could deny people better prices

Today the Competition and Markets Authority (CMA) has presented its preliminary findings from their investigation into Compare the Market in relation to their contracts with home insurers.

The CMA has provisionally found that clauses in many of Compare the Market’s contracts with home insurers break competition law and could lead to higher premiums. You can read the CMA’s statement here: https://www.gov.uk/government/news/comparethemarket-home-insurance-deals-could-deny-people-better-prices

The CMA has investigated clauses used by Compare the Market in its contracts with home insurers which stop the insurers from quoting lower prices on other price comparison websites and other channels. After reviewing the evidence, the CMA has provisionally found that these so-called ‘most favoured nation’ clauses could be causing customers to miss out on better home insurance deals. This is because these clauses prevent rival price comparison sites and other channels from trying to win home insurance customers by offering cheaper prices than Compare the Market.

It also means home insurance companies are more likely to pay higher commission rates to comparison sites with the extra costs potentially being passed on to customers.

As a result, people buying home insurance could be missing out on cheaper insurance premiums.

The CMA has issued Compare the Market a ‘statement of objections’. This sets out its provisional view that these contracts break competition law. Compare the Market will now have an opportunity to respond in detail and the CMA will consider the response and any further evidence before reaching a final decision.

CMA Chief Executive, Andrea Coscelli, today said:

“Over 20 million UK households have home insurance and more than 60% of new policies are found on price comparison sites. Therefore it’s crucial that these companies are able to offer customers their best possible deals.

Our investigation has provisionally found that Compare the Market has broken the law by preventing home insurers from offering lower prices elsewhere. This could result in people paying higher premiums than they need to.”

honcho fully supports the CMA’s provisional findings.

Gavin Sewell, honcho CEO, commented:

“We have long campaigned for transparency, equability and fairness in the UK insurance market, and we are pleased to see that the CMA equally agree that some of the practices undertaken by some price comparison websites today are against the best interests of consumers. Customers of price comparison websites should absolutely be able to see how those websites make their money and where any conflict of interest exists.

“We hope that the industry will act in the best interests of customers by becoming more transparent in this area. We await the CMA’s final findings on this matter.”