Clamp down on comparison websites

The growing clout of price comparison websites like Gocompare, Comparethemarket and Confused.com has stirred the UK authorities into trying to stop them abusing their power.

This is a new front a battle to contain the influence of internet sellers who gain easy access to millions of shoppers by advertising on TV and promising better choice and value.

This time the sites stand accused of charging us too much for car insurance by forcing insurers to accept agreements preventing other players from offering discounts.

The result, the Competition and Markets Authority is saying today, is that we are paying too much. The AA puts it at £20 too much per policy.

So how powerful are these websites? If you look at the detail of the CMA's report, you see how they have crept into a position from which they can force some of our biggest companies to do their bidding.

Although only 23% of motor policies are sold through the sites, 56% of new business -- not renewals, that is -- goes through them.

Of those policies, between 80% and 90% have been sold with the aid of special price agreements which defend the price comparison sites from being undercut -- agreements which insurers signed because these internet operators are the main way of winning customers.

Their operating margins are a very healthy 25%. That's a rate of profit which most financial firms would view with envy.

The CMA is banning agreements under which insurers concede that no one else will be able to charge less the the price comparison site.

This isn't the first attempt by the UK authorities to clamp down.

Over the summer the financial watchdog, the FCA, fired a shot across the bows of price comparison websites, accusing them of giving users insufficient information to choose products.

What happens is that you are lulled into thinking price is everything and don't check what you are buying. With insurance, you might get a cheap policy, but the level of cover might be totally inadequate.

And earlier this year, the Office of Fair Trading -- now part of the FCA -- had a go at the hugely influential websites which book hotel rooms and had deals in place with hotels to stop other online agents from offering discounts.

Booking.com, Expedia and Intercontinental Hotels gave undertakings to permit the discounts, giving people the opportunity to shop around.

All these are skirmishes in an ongoing contest which pits regulators against a growing army of internet giants, who tell us they are on our side but can't always be relied upon.

The main problem with the price comparison and hotel booking sites is that they could rightly claim to be offering the cheapest deals - but that was only because other deals had been excluded.

Can they be contained? The CMA is showing that they can be, to an extent.

It is banning price agreements which cover the whole market. However, it won't prevent comparison sites from stopping the insurer offering a better price for cover on its own website.

These businesses are highly profitable, cheap to run and enjoy significant market power. It won't be long before they lock horns once again with those bodies whose job is to protect us from being overcharged.

Black box App

Black box technology could be the future for many drivers, especially young drivers, who find car insurance is unaffordable.

The gadgets monitor your driving skills and when you take the car out (insurers think it's much riskier at night). If you're good, the cover should be cheaper.

So why not try out the technology on your smartphone?

One provider, Young Marmalade, has come up with an App to keep tabs on your driving - and show how the system operates.

Worth a try! See if it works.

Some firms offering motor insurance with a black box:

Young Marmalade

Co-operative Insurance Services

AA Insurance

Merry-go-rounds, crash for cash and insurance

What was behind the 25% increase in my car insurance quote this year? Or the 33% rise in the average premium, leaving it at a record level, or the 58% jump in young drivers' insurance costs?

The Transport Select Committee has laid bare two features of the insurance world which will leave some people shaking their heads.

The first is the merry-go-round of "referral fees". If you have an accident, likely as not, either your insurer or the breakdown company or the repair company or even the car hire company will sell your details to a personal injury law firm, for a fee.

And the lawyers or claims companies will pester you to sue for compensation.

MPs say that the referral fees can range from £200 up to £1,000. There are more claims and the fees get added to the bill.

The second feature is the proliferation of "crash for cash" scams. The police told MPs that there were 30,000 staged accidents in a recent 12 month period.

The fake crashes are used to justify fraudulent insurance claims, many of them for injuries which never occurred.

The Select Committee speculates that these criminal claims are growing in number, for the obvious reason that the scam works.

But the result of both of these developments is that there is even more pressure on the price of insurance.

And today's report suggests that insurers don't care as much as they should, because they have a pressure release valve. If their costs rise, they simply pass them on to the motorist.