OFT stops car insurers comparing premiums

Seven car insurers, including Aviva and Royal Sun Alliance, today agreed to stop using software that shares policy prices after the Office of Fair Trading said it could limit competition and push up premiums.

After the average motor policy rose a massive 38.2% to £695 last year, the OFT said it had investigated insurers' use of a specialist tool by Experian called Whatif? Private Motor which allowed them to find out how much rivals were charging particular risk groups.

The practice emerged after Royal Sun Alliance told the OFT. After its investigation, the watchdog said the software led to "an increased risk of price co-ordination".

Aviva, RSA, Ageas, Axa, Liverpool Victoria, RBS Insurance and Zurich Insurance, and IT firm SSP, have now all agreed to stop using it. The OFT said it hopes the action "will send a bigger message to the industry".

Clive Maxwell, executive director at the watchdog, said: "We are aware that similar market analysis tools exist both in motor and other insurance markets and we urge companies which are using them to ensure that they are complying with competition law."

The Association of British Insurers said: "The motor insurance market is competitive and offers choice for customers."