LONDON, 12th June 2014 – In response to the Competition and Markets Authority’s (CMA) proposals to increase competition and reduce the cost of premiums for motorists in the private motoring market, Murray Raisbeck, insurance partner at KPMG said:
“Insurers will generally welcome the CMA’s proposals to change the motor insurance market. A number of the proposed changes will help the industry make positive steps towards aligning customer and insurer interests. In particular, the cap on prices that credit hire operators charge the ‘at fault’ insurer should bring the cost of claims down and have a positive impact on premiums. The banning of restrictive price arrangements by Price Comparison Websites will also provide customers more options to find the best deal.
“None of the proposals should come as a huge surprise to the insurance industry as they have been well trailed by the Competition Commission. However, it was uncertain how far the CMA would go with some of the proposals. Insurers had voiced concern that the proposals may create frictional implementation costs which largely countered any claims costs benefits that were being targeted. The fact that the proposals no longer require new rules around accident repair quality should go part way to alleviating that risk.
“The investigation has been very long running, which has meant a long period of uncertainty for the industry. Consequently a number of strategic decisions on business model changes have been put on hold whilst waiting for the outcome of the investigation.
“In fact, there have been a number of sources of uncertainty for the industry over the last couple of years, a number of which are becoming clearer. These include the impact of the changes to the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), the shifting Solvency II timetable, as well as the establishment of the new regulatory regime with the split of the Financial Services Authority into the Prudential Regulation Authority and Financial Conduct Authority.
“Now the legal and regulatory frameworks are clearer, this means that Boards are able to refocus their efforts on key business drivers such as the impact of technology on their businesses, and keeping up with ever changing competitive pressures.”
Notes to editors:
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.