Pay As You Drive (Through the nose)

Norwich Union sorry, Aviva* have announced that they are pulling the plug on their Pay As You Drive Car Insurance product, after disappointing sales and low take up of their tracking technology.

The idea behind PAYD is that you install some GPS telemetry gubbins in your car, so that Norwich Union can track where you go, when you go and how you get there, and in return they charge you a variable rate per hour of between 5p a mile and £1 a mile, depending on whether you're on a leisurely drive through the Cotswolds at noon or caning it through Brixton at midnight.

The problems with this are manifold. Do you really want your insurer to know how fast you are driving on every occasion, where you go to regularly? Privacy is a major concern for many people with any kind of pay as you drive mechanism, and who is to say what NU would use the info for, or even if they'll sell it to the highest bidder?

Even Norwich Union's own marketing spiel could only come out with a statistic as underwhelming as this :

"24% of "Pay As You Drive"™ Pilot customers would have saved up to 30% compared to a standard Norwich Union Motor Insurance premium"

I'm not sure if that means that 76% were worse off, or no better off for choosing PAYD, but in any case you would expect bigger savings than this from the hot air they spouted when they launched the product.

In any case, ans as we previously pointed out, a limited mileage policy is a better, lower tech solution for most young drivers, and offers the added advantage of a set monthly bill, so no sudden stings or big fluctuations when you have to travel more than in an average month (like many students travelling long distances a couple of times per term.) What's more, in many cases the savings with a limited mileage policy can be quite substantial, and you don't have to worry about fitting an ugly black box to your pride and joy. (Hmm. I wonder if you have to declare a telematics unit as a modification.)

Despite Aviva's attempt to spin this failure as a result of fears of a surveillance society, I think the real problem is that the product was quite gimmicky and did not in fact offer drivers an attractive way of using their cars, and so it was doomed to failure.

The 10,000 policyholders are now being substituted onto other policies, which means in a week or two we will be seeing uproar on the forums as someone gets stung for a massive premium increase. Oh dear.

*(incidentally, we told you that piece of news aaaages ago - before they did, in fact)

Worst Car Insurance Advert - Ever

If you thought the wall to wall car insurance adverts on daytime tv, were bad, wait till you see what our American cousins have to watch in their commercial breaks. This advert is worse - much worse - than anything Admiral, Confused, Elephant or even Hastings Direct have ever put out.

Having said that, for all that it is really, really bad, it is still, somehow, less annoying than Harry Hastings, the Admiral and their drama school reject chums who clutter up the British airwaves.



Weirdly, their website looks completely nondescript and corporate!

Bye Bye Norwich Union?

It looks like Norwich Union's days are numbered.

Parent company Aviva have decided that in the interest of maintaining the same brand across the world, the Norwich Union brand has to go. They had previously said they would retain it.

Cue a massive marketing spend on the rebrand, and higher premiums to pay for it, no doubt. I can't imagine the reasoning behind replacing a brand as strong as Norwich Union, which is almost synonymous with insurance with an unknown quantity like Aviva. Sounds like a recipe for disaster to me.

Renault Megane - French in sense of humour shock.

For Friday, here's another one from the foreign adverts that are better than ours file:

Here's Renault showing us something humourous - and this time it's not just the 'quirky' rear-end of the Megane...

Bonzer Car Insurance Deals?

G'Day!

The Guardian on Saturday had an interesting piece on the perils of buying your womens car insurance from a so-called "womens car insurance company", such as Sheila's Wheels, Diamond, Ladybird and Diva.

Despite jingly and annoying adverts promising massive savings on car insurance to members of the fairer sex, the Guardian's research found that women might not actually save "a bunch of fivers", by taking out insurance from the self-proclaimed specialists.

Oh no. In fact, they could end up paying a whole lot more.

When they ran a quote through a well-known insurance price comparison site the womens car insurance companies did not fare as well as expected. Sheila's Wheels came out at £26 more than the cheapest quote (the stupidly and expensively rebranded LV=), and poor old Diva wanted a whole £94 more.

But if you're a woman driver, there's worse news to come, when you hear who else beat Sheila's Wheels. Other insurance brands that came out cheaper than Sheila's Wheels included - Halifax Car Insurance, Sainsbury's Car Insurance and esure.

Hang on a minute! Cast your mind back to my previous post "Who owns your insurer?"

Let's check that list again, shall we?

• Halifax Insurance - part of Halifax Bank of Scotland (HBOS)
  
• Sainsbury's Car Insurance - run by esure (part of HBOS)
  
• esure - part of HBOS - calm down, dear!

Now remember, all of those came out cheaper in the Guardian's survey than "women's specialist" Sheila's Wheels, who are (let's just check their website) - oh, yes "a division of esure" and part of HBOS.

So it turns out that (for the examples the Guardian checked, anyway) esure will charge you less, as a woman, than their own specialist women's "division".

The Sheila's Wheels spokeswoman (Niki Bolton) accounted for this by saying that the Sheila's Wheels policy had bonzer extra features such as:

• Handbag cover (available elsewhere, but almost certainly included in your home insurance!)
  
• Female Friendly garages (remember if you've had an accident and claim on your insurance, it's down to the insurance company to worry about which repairs are necessary and how much work the garage has actually done. Believe it or not, most insurance companies don't tend to deal with garages who habitually rip them off or patronise clients and will have their own network of garages who they trust. Plus climbing onto your moral high horse over patronising attitudes is a bit rich if your parent company is responsible for those Michael Winner ads.).
  
• A 24 hour counselling line for drivers traumatised by an experience on the road. (They don't say if they provide a similar service for drivers traumatised by the size of their car insurance quote)

Spokesperson, Niki Bolton, is also listed here as PR manager for esure and also speaks for First Alternative. Perhaps if the Guardian had asked her to speak on behalf of esure, she might have told you that all of the above "features" are just pointless trimming and that you should get your insurance from esure instead. And presumably if you are traumatised on the road and ring esure in an emotional state you are put through to Michael Winner who simply tells you to calm down, dear. Sadly we'll never know.

As the Guardian found, if you want womens car insurance you would do well to look beyond the big spending advertisers who tell you they can save you big money, but in reality charge you a hefty premium for a pink policy document and some flaky add-ons.

Here at Adrian Flux, our specialist womens car insurance schemes save women up to 35% compared to male drivers. Now that's what I call fair dinkum.

Who owns your insurer?

Direct Line vs Confused part 5.

One of the complaints that Direct Line made about the aggregators was about the ownership of the comparison sites, suggesting, I suppose, that perhaps the price comparison sites might be biased in favour of their owners.

What many people don't realise is that many of the competing brands of insurance advertising on your TV screens every day are all owned by a relatively few companies, and very little mention is made of the links between them.

Direct Line have been very quick to point out the following ownership issues with the aggregators, but after reading the whole of this post, you might decide that they have been lobbing stones from their own glass dwelling.

Confused.com owned by Admiral. Yes, that Admiral. They also own elephant.co.uk, Bell Direct and Diamond, the womens car insurance specialist.
GoCompare are "independent" but have received a £30m loan from esure. If they can't pay esure back in cash, esure become a major shareholder. That's according to the Insurance Times.
Compare the Market is owned by Budget. This one is a bit naughty, as all of the brands quoted are Budget group companies - but they don't make that obvious - they also own Dial Direct and Junction who run the insurance arms of the Post Office, Marks and Spencer, Debenhams, Bradford & Bingley, Homebase and yesinsurance.com.
MoneySupermarket have just floated (in what was described as an "unfortunate" stock market debut, they failed to raise as much cash as had been hoped for, partly due to a recent Google penalty for link spamming which saw their web traffic shrink alarmingly!). As such they are independent.

So much for the main price comparison sites, what about some of the other big insurance brands?

HBOS Group owns Halifax Insurance, esure, Sheilas Wheels and First Alternative.
Royal & SunAlliance owns More Than
GroupAMA owns Carole Nash & Lark
AXA owns Swiftcover and offers quotes as Lloyds TSB Insurance and insurance.co.uk
AON owns Firebond & Footman James
IAG owns Hastings Direct and Equity

There are loads more like this, but finally we come to

RBS Group - the Royal Bank of Scotland Group includes our old friends Direct Line, plus Churchill, Privilege, NIG as well as insurance sold branded as Tesco Insurance, Natwest, Virgin Money, MBNA, BMW Insurance, MINI Insurance, Mint, Egg, Nationwide, Age Concern, Vauxhall Insurance and several others!

Of course, I'm sure none of those brand affinity deals count as middle men, at least to Direct Line's way of thinking. And I'm sure Direct Line think that everyone must know that they are part of a larger insurance group, otherwise they wouldn't have made such a big fuss over the ownership of the price comparison sites. And I'm sure that none of the RBS Group would ever use a price comparison site, much less run one, given the arguments put forward so forcefully by Direct Line.

That must be another company starting up tescocompare.com, then, registering the domain name and taking out a trademark. And it must be a different

RBS Insurance, whose brands include Direct Line and Churchill, is understood to have invested millions of pounds in the venture.

All this makes me very grateful to work for a family owned specialist car insurance company - my life would be very confusing if I had to reconcile multiple sets of brand values that were pulling in different and mutually contradictory directions!

But for the customer - beware and make sure that when you ring round you are actually getting quotes from more than one company. And if you call us on 08000 838 833, we'll impartially check our panel of over 40.

Update 21/09: Well what do you know! Tesco Compare has launched with a whole load of RBS Group brands offering quote comparisons "that you can't get anywhere else" (although no Direct Line, of course) along with a large quota of HBOS companies.

Policy Add-ons - Useful or useless?

This is part four of my analysis of the Direct Line / Confused.com war of words.

Another prong of Direct Line's assault on the aggregator websites was a claim that there was no information on policy features and add-ons provided by the price comparison sites, and that often the prices are cheap because the policy is very basic.

On the face of it, this seems like a reasonable point, but some of the aggregators do allow you to compare other features of the policy and there are other reasons that we shouldn't accept this argument on face value.

Lets take a look at some of the "great" policy features that Direct Line brag about to their potential customers:

• Named drivers earn their own no-claims discount: This, along with the advert used to illustrate it, seems to me to be a tacit admission that many of Direct Line's policies are what are called fronted risks. This is insurance jargon for insuring your car in the name of your parents, or another elder relative, and most insurers consider this a form of fraud and some will decline to pay out if they establish that a named driver is actually the main user of a vehicle if this has not been clearly stated at the time the policy was taken out. Adrian Flux will usually decline to offer a quote on anything that looks like this situation, but that's not to say you can't get a discount for driving experience you have built up while covered on someone else's policy - if this is your situation, ring us on 08000 838833.
• Match your no claims bonus on a second car plus 10% discount for second cars: As specialist insurers with lots of classic cars, kit cars, cherished cars and show cars on our books, many of the cars we cover are second cars, or even third, fourth or 38th cars. As a result we've been offering matched No Claims Discounts for years, and that applies to standard cars as well. In fact if you have more than a couple of cars we can offer multi car insurance or a family fleet policy. And our discounts for second third and fourth cars can rack up to substantially more than 10%, because we know that you can't drive everything at once.
• Keep your no claims when you are hit by an uninsured driver: Sounds great doesn't it, but there are a few catches here. First off you need to give Direct Line the registration number of the offending vehicle. No good at all for those numpties who hit your parked car while you're shopping nor if the criminals (which is what uninsured drivers are, after all) speed off without giving you a chance to eyeball their plates. They'd also like you to collect the uninsured driver's details "if possible". You could just get a protected no claims policy which would protect your no claims discount, whatever the cause of your claim. Most companies now offer this feature for a small additional premium.

That of course is the point. All of these features come at a cost, and the customer has to pay for these features.

With a specialist car insurance broker, like Adrian Flux, you can ask for policy features that match your needs and we will do our very best to find a company with a policy that offers what you need. You may pay a little extra for the additional benefit, but most people would agree that that's only fair.

But if you're with Direct Line, you are paying for the provision of those named driver benefits and uninsured claim NCB protection whether you want them or not - through a higher premium. And what's more, you may find yourself with a restricted choice at renewal time, as virtually no other insurer will decide to accept their named driver no-claims discount (that is the case at the time of writing anyway)

As I said earlier in the post, we would be able to offer an introductory discount for driving experience as a named driver, but younger drivers may well, in years to come wish that they had just got insurance in their own name with their own NCD.

And while we're on the subject of policy features, most customers these days have grown used to the fact that most comprehensive policies now include a courtesy car while yours is off the road as a standard feature. Direct Line don't.

Nor do they include free legal cover.

I haven't heard them mention that in their ads, though.

Direct Line Aggregator Bashing Part 3

Some more analysis of the Direct Line spat with confused.com and the other aggregators.

Another avenue that Direct Line have cited as a problem with aggregators is the "jumping quote" syndrome, where you get a quote from the aggregator, only to get a different, higher quote when you try to take out the policy.

In reality there are several reasons why an initial online quote might be modified when you try to take out the policy, none of them are entirely the aggregator's fault. In fact many of the problems are also faced by brokers, who also have to deal with a panel of insurers with differing rules and requirements.

First off, the questions the aggregator (or indeed broker) initially asks may not be the same as the questions that the insurer wants to ask. There may well be factors that an insurer takes into account that have not been accounted for by the designers of the "one easy form."

Second, the proposer may have omitted certain information about the risk, whether deliberately or not, that the insurer may be in a position to pick up on more easily than the aggregator could.

Thirdly, it is usual for quotes to be valid for a set period of time, which may well vary. If you come back to the insurer after that time, the quote may have gone.

Fourthly, some quotes assume an online discount which will not apply if you ring in to take out a policy.

Of course Direct Line choose to get out of these difficulties by not making their rates available to aggregators at all, the form on their website, which they have designed is the only one you can fill in for a Direct Line Quote. There would be real problems if their quotes varied in the same way between web form and policy go-ahead.

Do "Middle Men" cost the customer more?

This is my second post on the Direct Line vs Confused et al fight.

Direct Line's first line of attack is that comparison sites are not open about how they are funded. There are two main ways of selling insurance. An insurer can sell direct to the public, or through a broker. A broker earns commission on policies sold. So surely direct writers will be cheaper? Well, in a word, no.

There are a lot of costs involved in setting up a direct writing insurance business. As well as having the insurance specialists required to manage the underwriting, you have to build your own computer systems, get a big office and staff your call centre and office to cope with sales and customer service, claims teams. Then you have to spend tons of money marketing your product and brand so that people know you even exist. You could have spent millions before you've even sold a policy.

That's why many insurance providers choose to sell their products through brokers. It leaves them free to concentrate on insurance, while the brokers deal with the marketing, sales, customer service and front end staffing, all funded from the commission payment. Claims management specialists can be engaged to handle that side. All of this means that the insurers save plenty of money.

Brokers can be more efficient by offering cover from a range of different insurers - we have more than 40 on our panel. In the circumstances where one is not competitive, another may well be, so the customer wins, as a broker can offer a competitive quote in more situations than a standalone insurance provider.

Where do aggregators fit into this?

Aggregators present a special case, offering to the insurer (or broker) just the initial marketing stage of the transaction and generating leads for the insurance providers sales teams (or website).

As such they are usually paid a flat rate per policy go ahead, and in this respect are treated in a similar way to online affiliate deals, and the more traditional payment per policy deal negotiated with other introducers. Do these cost the customer more - almost certainly not, as the cost of marketing will already be factored into the cost of a policy, and aggregators are no more expensive as a source of business than other methods. Indeed they would be much, much cheaper to the insurer than a nationwide TV campaign, as favoured by Direct Line.

And, as we know from these advertisements, Direct Line absolutely hate "middlemen" like this and refuse to pay the comparison sites for introducing business to them in return for anything so very grubby as a cash payment of around £60.

However if you fancy yourself as a middleman yourself, you could always join the Direct Line affiliate scheme and introduce business to them in return for... er... a fee of £60.

A lesser man than me might suggest that that smacks of hypocrisy.

Direct Line vs. Confused.com

There's been a lot in the papers about the spat started by Direct Line, whose wheeled telephones (more of those in another post) have been gracing our screens for many years. As you may have seen, their recent commercials have pulled no punches in exposing perceived shortcomings with the price comparison "aggregator" sites, like confused.com, gocompare and insurancesupermarket.

They've suggested that the comparison sites are too focused on price and take no account of added features, such as courtesy cars, or the weird and wonderful extras that Direct Line attach to their policies, whether you want them or not.

This has sparked a full on barney between Direct Line and the aggregators.

First, Direct Line's blanket TV ads accused Confused, Money Supermarket, Go Compare et al of numerous alleged offences:

1. deceiving the public by not being open about how they were funded.
2. providing cheap quotes which go up when you try to take out cover.
3. not offering extras and add-ons.
4. not being honest about who owns them.
5. that many people did not realise that not all insurers appeared on the price comaprison sites.
   

So then the comparators struck back, pointing out Direct Line's own shortcomings. But Direct Line were on a roll and promptly produced new research claiming they were the cheapest insurer. This research came across as a little suspect from the off, as DL were defined as the cheapest "major insurance provider" on the basis that they "were amongst the three cheapest providers" 257 times out of 1000 quotes.

So MoneySupermarket released figures that showed that in many cases Direct Line wouldn't even get into the top 10 quotes on their site, and suggested this was the reason that Direct Line hated comparison sites.

In all of this, brokers like us seem to have been ignored, although our record levels of business so far this year would suggest that there is plenty of opportunity for the old sort of "middle man".

So let's have a look at this in a bit more detail. Over a few posts I'll be asking some pertinent questions.

• What about the points raised in this spat between Direct Line and the aggregators?
• And who should you choose, a direct writer, comparison website or broker?

Some of the answers may be surprising!

Worthless Promises from Barclays and Churchill?

That's what the Guardian says, anyway. (scroll down to 2nd story)



You've probably seen these home insurance ads all over the TV.* Barclays home insurance promises to beat your quote - if they can't they'll drop their price by up to £100 and give you £50. Of course it's not nearly as simple as that. Reading the full terms and conditions you begin to get an idea of how complicated Barclays have made it. Rather than knocking the money of the premium, the promotion works on a "cashback" style basis, so you have to pay them the full amount first - which may well be more than your renewal - and then you have to remember to send them proof of your previous renewal offer. Finally you have to wait "up to 28 days" for your cheque to come back, go to the bank, pay it in and wait a further 3 days for it to clear. In the meantime Barclays have your money which they can earn interest on in the meantime. And of course, at each stage some people will forget to do one of the necessary steps and Barclays just keep the money.

But look what happens the second year. In their marketing spiel, Barclays say, "Next year if you remain claim free, we'll promise to beat our first year quote." But remember, the first year quote may actually have been more expensive than you were paying in the first place. And as the example in the Guardian shows, there's a good possibility that Barclays won't come near your existing premium anyway. Indeed, if the journalist had been dumb enough to go ahead with Barclays, he'd have been down £238 overall, assuming that Barclays only dropped their renewal price by £10 or so.

Then there's the "Challenge Churchill" campaign. In respect of their claim the journalist found that while they did drop the price to match a competitor, they did not match the level of cover for his car insurance.

So the moral of the story is: beware of slick marketing campaigns. Check that no bizarre or onerous conditions are buried in small print, always check your level of cover, and if, when you phone up you find the deal isn't quite as good as you thought it was, perhaps you should be very wary of proceeding.