Posts tagged confused
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!
Insurance comparison sites are springing up at a rapid rate, as new entrants emerge onto the market every day to give confused.com, moneysupermarket and gocompare a run for their money.
But how valuable are comparison sites?
I’ve previously looked at sources of bias, and lack of market coverage, but this week the FSA came back with their assessment of the state of the market, and in particular how it affects customers.
It’s the specific examples of bad (and good) practice that are interesting, as the problems will resonate with anyone who has spent much time on the different aggregator sites.
Here are some of their findings of bad practice by car insurance comparison sites:
Some sites have…
“Notification that assumptions have been used to generate quotes, but no indication of what those assumptions are.”
Helpful if you click through only to find out you are not eligible for that particular quote because of that SP30 you picked up 2 years ago.
“Using price as the sole basis for “comparison”, but not advising consumers that they should consider other factors, and that the difference in price is likely to reflect the different levels of protection offered by the policies.”
This is pretty major. Anyone can put a policy together that’s cheap, as long as they leave out most of the features that normal people might actually want. Even Swiftcover, who compete as aggresively on price as anyone, know that, as demonstrated by their own news release on unwitting assumptions made by drivers on levels of cover.
“Not listing all benefits provided by the policy, and not providing information on the basis for listing the benefits nor advising consumers that policies may have other benefits not listed.”
Not listing all the benefits makes it very hard to do a truly fair comparison without ringing the insurance companies concerned, which would kind of defeat the point of the aggregator site. Imagine if you had two quotes around £10 difference in price. What the FSA are saying here is that the second place quote could have free breakdown, legal and accident cover, but you would never even know.
“Not making it clear that the policies listed did not all contain the provisions or benefits specifically requested by the consumer.”
Can you believe this. You’ve asked the comparison site specifically for quotes with protected no claims bonus, and then the site ignores you and returns policies with and without the feature you’d asked for. And this actually happens. It’s easy to see some very tricky situations developing here in the event of a claim.
“Providing a figure for the “total excess”, when in fact this is only the voluntary excess and a further compulsory excess will need to be applied. In one case, a further compulsory excess of £320 was applicable. The compulsory excess figures quoted on the site were provided as the actual level of excess to be applied, but were shown to be incorrect when compared to the broker’s or insurer’s website. In one case a figure of £100 was given for the compulsory excess, but in fact the actual compulsory excess applicable was £475.”
Ouch! This may just be poor programming, but it comes across as dishonest. By the time you would find out about this you are probably well into the ‘winning’ quote’s site, and would probably be dubious about checking the other results in case the same happened again.
“The quote given on the comparison site differs from the quote given on the brokers or insurers website, but no information has been changed and no additional questions asked to warrant a change in price.”
This is the one that most people notice, and possibly stems from a different set of assumptions (but why?). Again it comes across as being something like a con if the price has ‘revised’ upwards.
“The information provided by the consumer to the comparison site is incorrectly passed to the broker or insurer.”
The whole point of comparison sites is that ‘You only have to enter your information once’ so this just seems shoddy.
“Figures given for the cost of optional extras are incorrect. In the majority of cases seen where the cost was incorrect, the comparison site underestimated the cost of the optional extras.”
Why? Are they just guessing, or do they not think anyone cares about the price of car insurance optional extras?
“The quote given by the comparison site excludes certain features (for example legal assistance and breakdown cover), but these features are then automatically added to the final quote price when proceeding through to payment on the broker’s or insurer’s website.”
I think we have to let the comparison sites off this one, to be fair. The fault here is the broker or insurer applying the old thetrainline.com tactic of whacking on all the optional extras by default, which is annoying, but hardly the aggregator’s fault.
So what can you do about this?
Well as the FSA have decided, in their wisdom, not to ‘name and shame’ the aggregator sites which are getting away with these poor quality features, it’s down to you as the customer to keep an eye out and beware of misleading information. Saying that, it is true that insurance comparison sites perform an important service, and help you narrow down some of the thousands of options and get a ballpark figure for your quote. Saying that, I would also recommend that everybody should ring a couple of direct insurers, and at least one specialist insurance broker (like us for example – if you need a quote, call us on 08000 83 88 33).
There are many companies that still don’t appear on comparison websites, despite the misleading claims (according to the FSA) of almost total market coverage by some of the aggregators.
What’s more, specialist brokers may well have a specialist scheme that fits your situation, and here at Adrian Flux we have over 200 such schemes with 40+ insurers on our panel, so you may well be special without realising it, and that could save you lots of money. The third reason you should consider a broker, is that the broker can take many more factors into account than any comparison site, and more importantly, we only need to ask the questions that are relevant to your situation. Some of this can only be done over the phone, when we can talk to you direct and treat you as an individual.
In any case, if the FSA is to be believed, you need to be careful before accepting comparison sites at face value.
Important Note: this blog post was written in 2007 – due to the ever-changing nature of the insurance market, ownership of brands, and the way that insurers, brokers and aggregators operate is subject to change from time to time, and as a result, this information may well be out of date in many cases.
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, “Local Broker“, ibuyeco, Quote Mart, 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, Choice Quote, Bollington & Lark
AXA owns Swiftcover andhas a share in Venture Preference. It also offers quotes as Lloyds TSB Insurance and insurance.co.uk
AON owns Firebond & Footman James
MMA owns Swinton, its4me & bullseye
Zurich owns Endsleigh
Fortis owns RIAS
Kwik-Fit Insurance Services owns Express Insurance
BDML Connect owns Lancaster
Fresh Insurance owns Ladybird and First Insurance
IAG owns Hastings Direct, People’s Choice, Diamond, Advantage, Open & 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.
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.
Update 04/09/2008 – brands moved, bought etc. since last time I checked have now been added.
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.
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.
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.
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:
- deceiving the public by not being open about how they were funded.
- providing cheap quotes which go up when you try to take out cover.
- not offering extras and add-ons.
- not being honest about who owns them.
- 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!