June 11 (Reuters) - Britain’s competition watchdog will announce on Thursday sweeping reforms of the car insurance industry that are designed to reduce costs for motorists, the Financial Times reported, citing sources.
The Competition & Markets Authority (CMA) will introduce a cap on replacement car costs, saying overly expensive replacement vehicles cost consumers as much as 180 million pounds ($302.24 million) a year through higher insurance premiums, according to the FT's sources. (link.reuters.com/byp99v)
It added that the regulator was also preparing to ban anti-competitive “price parity” deals, in which insurers reach exclusive agreements with websites not to offer consumers lower prices elsewhere.
Tough competition has already driven prices down in Britain’s car insurance market, dominated by companies such as Aviva Plc, Direct Line Insurance Group Plc and Admiral Group Plc.
The CMA, which could not be reached for comment outside of regular business hours, will also crack down on price comparison websites and propose that insurers improve “often unclear” disclosure about the terms of no-claims bonuses, the paper said.
Britain’s Competition Commission, which was replaced by the CMA this year, first criticised the complexity in the industry’s claims process and its lack of incentives to keep costs down in December. ($1 = 0.5956 British pounds) (Reporting by Richa Naidu in Bangalore. Editing by Andre Grenon)