Car Insurance

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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.

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