Crackdown on insurance firms

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WATCHDOGS have outlawed a motor insurance practice which allowed companies to access information on each other’s premiums, threatening higher prices for drivers.

Firms effectively traded between themselves what should be private information on how much they would charge different types of driver, using software created by the credit rating agency Experian.

Motorists shopping around for the best deal through brokers were likely to find little competition or potential for savings.

The Office of Fair Trading says seven leading insurance companies and two partner firms have agreed to limit the private information they share on motor premiums.

The insurers involved are Ageas, which was formerly known as Fortis, Aviva, AXA, Liverpool Victoria Friendly Society, RBS, Royal Sun Alliance and Zurich.

The Experian software allowed insurers to access not only the pricing information they provided to brokers but also the premiums supplied by their competitors.

In theory, this allowed insurers to tie their charges to those of rivals, so limiting competition and keeping premiums artificially high.

The insurance firms and their partners, including Experian, have all agreed to sign a legal undertaking, which will be policed by the OFT, to prevent such detailed information sharing in future.