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November 21, 2010 14:01 ET

Moneysupermarket.com Joins Car Insurance Inquiry

CHESTER, UNITED KINGDOM--(Marketwire - Nov. 21, 2010) - Price comparison website Moneysupermarket.com has submitted a number of recommendations to the Transport Select Committee in an attempt to curb the rising costs of UK car insurance.

The past year has seen an unprecedented rise in the cost of car insurance with the average price of a Fully Comprehensive policy now standing at £650, representing an increase of 37.5 per cent on this time last year.

Young motorists appear to be bearing the brunt of the price increases as insurance costs for 17-20 year-olds have risen by between 10 and 11 per cent in the last quarter alone!

And, due to consumer unrest, the Transport Select Committee, whose job it is to examine the expenditure, administration and policy of the Department for Transport and its associated public bodies, has agreed to hold a short inquiry into the cost of motor insurance.

This inquest will focus on:

  • The reasons and consequences of recent increases in the cost of motor insurance.
  • The impact on young people of the high costs of motor insurance.
  • The extent to which the cost of motor insurance is influenced by the prevalence of road accidents, insurance fraud, legal costs and the number of uninsured drivers.
  • Whether there are public policy implications of the rise in the cost of motor insurance and, if so, what steps the Government might take in response to them.

In response to this Moneysupermarket has issued three recommendations for action:

  • The Government should seek to encourage major insurers to utilise existing technical solutions to help remove entry barriers to customers under the age of 25.
  • The Government should strengthen penalties for uninsured driving and fraudulent claims to ensure the potential fine is greater than the cost of car insurance.
  • The Government should continue to reform the structure of compensation claims to limit the costs incurred by insurers. Moneysupermarket.com would like to urge the Committee to ensure the reform is implemented in a way that will enable insurers to pass on lower risk to consumers.

Moneysupermarket claim that price comparison websites such as theirs have helped improve market transparency in the insurance industry and allowed customers to easily switch providers which, in turn, has kept prices competitive and slowed down the rate of increase.

But it is feared that market transparency is no longer enough to prevent rising costs within the motor insurance industry being passed on to consumers and so news of the inquiry is both timely and welcomed.

Steve Sweeney, head of insurance at Moneysupermarket.com, has said: "moneysupermarket.com welcomes the Transport Select Committee's timely inquiry into the rising cost of car insurance in the UK. Our objective is to help every household to make the most of their money, for example with moneysupermarket.com customers are able to save on average £237 on their renewal quote. We do this by providing our customers with a free online service enabling them to compare a wide range of products and to find the one most suited to their needs. Our customers can compare products by price, product features and service.

He added: "As consumers increasingly research and buy financial products online, price comparison websites continue to become increasingly relevant in the UK motor insurance distribution landscape, accounting for approximately 63 per cent of motor insurance sales. In the last year we have issued 3.2 million insurance quotes and have recognised the rapid rate of inflation in the car insurance market and the impact of recent increases on consumers."

The deadline for written submissions was Monday November 1st but the committee will be taking oral submissions throughout November and more information can be found at the following http://www.parliament.uk/transcom.

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