Reports suggest that price comparison site Compare the Market have been fined £17.9m for keeping house insurance prices “artificially high”.
Compare the Market were engaged in Contracts with insurance firms allowed them to keep prices artificially high, as it stopped these firms from offering cheaper prices on other sites due to clauses in their contract.
The CMA said that clauses in contracts between December 2015 and December 2017 stopped other comparison from being in fair competition with Compare the Market, as it stopped insurance firms offering lower prices on other sites they were affiliated with. The size of the fine is justified by some, as reports suggest these “dodgy” contracts played a huge part in the rise of home insurance premiums.
Compare the Market disagrees with these claims however, and doesn’t agree with the CMAs analysis, but customers are still left wondering if everything is as “simples” as the Meerkats on the adverts suggest.
“We fundamentally disagree with the conclusions the CMA has drawn and will be carefully examining the detailed rationale behind the decision and considering all of our options.” a spokesman said.
The CMA concluded that:
- Insurers bound by the contracts were unable to offer cheaper quotes on other price comparison sites.
- Rival comparison sites were also unable offer lower prices, for example, by lowering their commission fees to encourage insurers to quote lower prices on their platforms, due to these contracts.
- Without the clauses, ComparetheMarket itself would have had to compete harder to get lower prices from the home insurers – this move is said to have given CTM an unfair advantage in the market.
“Price comparison websites are excellent for consumers. They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains,” said Michael Grenfell, the executive director of enforcement at the CMA.
“It is therefore unacceptable that ComparetheMarket, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites – so limiting the bargains potentially available to consumers.”