Another expense with the car, be interesting to see what comes of this.

The Office of Fair Trading has stepped in to prevent car insurance companies from sharing information about the premiums customers were paying, due to concerns it will lead to higher bills for all of us.

Data sharing

It has emerged that insurers used a piece of software from credit firm Experian, which gave details not only of their own pricing structures, but also those of their competitors. Indeed, the information available to users was pretty extraordinary - they would be able to see pricing data for all sorts of different types of customers, information that would be near impossible to access ordinarily.

The insurers using the tool would even be able to access information about planned price changes to car insurance policies that hadn't even happened yet!

Are you paying to much to car cover? Compare quotes now

Lack of competition

Such a situation raises significant competition issues. If one insurer sees that all of their competitors are about to raise premiums for drivers under 21 by 10%, for example, it will be mightily tempting for them to follow suit.

And that's awful news for you and me as it severely hampers our chances of getting a competitive deal on our car insurance. Such information sharing limits competition and risks keeping premiums artificially high.

With fuel prices already hitting record heights - and likely to head further north in the weeks to come - that would be yet another blow to Britain's beleaguered motorists.

To keep the cost of filling up as little as possible, be sure to have a read of How to beat record petrol prices

How it's changing

The issue came to light after insurer Royal Sun Alliance, a user of the tool, notified the Office of Fair Trading when they became concerned that it may be an infringement of competition law.

And following an investigation by the watchdog, seven insurers have agreed to limit the data they share between them. Those insurers are: Ageas Insurance, Aviva, AXA, Liverpool Victoria Friendly Society, RBS Insurance, Royal Sun Alliance and Zurich.

So here's how the system will work in future: Insurers will still be able to get information on rivals' premiums through the software; however that information will now be anonymous and will represent the average of at least five insurers. They will also only find out about price rises when the rest of us do.

So there will still be a fair bit of data sharing, it just won't be quite as bad as was the case previously.

That should be a small relief to those of us getting towards our insurance renewal date, though given premiums have risen a whopping 40% over the past year, it can still be pretty tough to get a decent deal.

However, there are some things you can do to keep your policy premium as small as possible.

Shop around

Stating the obvious, I know, but it's always a good idea to shop around when looking for a car insurance policy, rather than simply accepting the renewal quote you get from your existing insurer. It only takes a few minutes and can be well worth the effort.

Compare car insurance and get £20 cashback if you switch

Keep it safe!

Where you keep your car can make a difference to how much it costs you to insure it. If you have a garage or private driveway, that can knock a few quid off your policy price. It's also worth adding an immobiliser, alarm and tracker to your car as this will reduce the risk of it being stolen and therefore bring your premium down.

Vary your excess

When you make a claim, you'll have to pay a certain amount yourself towards the repair of the car. This is called the excess. And how much you agree to pay can make a big difference to your eventual premium cost.

The higher the excess you pay, the cheaper your insurance should be... although this is not always the case. Read Watch out for this car insurance scam! to find out why.

More from lovemoney.com

*Based on a married 30 year-old male IT consultant living in London E2 insuring a 2005 Peugeot 206 CC Alure and a 2005 Ford Fiesta LX, with a married 30 year-old female office worker as named driver on both cars and a £350 voluntary excess. Both drivers have more than five years no claims bonus and no recent motoring convictions. Both cars are insured to drive up to 20,000 miles per year. Quotes are based on multi-car cover from Admiral and individual cover from Swiftcover.

Hi Darry

Thanks for the information on this, it will be interesting to see if it helps to keep insurance quotes varied from provider to provider.

I can't help but feel though that Data Sharing goes on a lot more than we all realise!

It's just one fix after another these days. We, the public, are being conned left right and centre. Petrol prices, insurance, supermarkets, banks, politicians ....... the list goes on - all fleecing us and bleeding us dry whilst their own profits rocket ever skywards.