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Insurance -
Insurance comparison websites under scrutiny |
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A Financial Services Authority has found bad practice among a section of insurance comparison websites.
In the latest review, the regulator has criticised insurance comparison websites that fail to offer fair and accurate information to their customers.FSA said that although some comparison websites were engaging in good practice, a number of them lacked clarity.
The regulator looked into whether consumers were encouraged to consider features other than price before buying a product. FSA was also concerned about the clarity of the levels of excess that apply to insurance policies. Insurance comparison websites were also investigated to find out whether adequate measures were taken to ensure proper listing on their sites of key product features within insurers’ policies.
An earlier assessment carried out in 2006-2007, found that there was no cause for immediate action however; the review established that there was a need to follow the development of the market.
The decision was prompted by the increasing number of general insurance comparison websites in the market and the volume of consumers accessing them. Recent figures suggest that almost 25% of all private motor insurance sold in 2007 was “aggregator-instigated”.
Ed Harley, FSA’s head of financial promotions said, “we welcome innovation and competition in the rapidly expanding insurance comparison website market.
However, we are keen that the market develops in a way that ensures customers are treated fairly and expect comparison sites to provide information that is clear, fair and not misleading.”
The FSA has been has been monitoring keenly, the insurance comparison website for the past two years and this latest review was based on an assessment carried out on 17 site.
In its report, the regulator pointed out that only a small number of insurance comparison websites provided a complete list of policy features. In fact, the review found that a large number of websites offered consumers nothing more than price in making their choices.
It said that the information given on these sites were misleading to consumers mainly because of a total lack of clarity.
FSA also says that although some of the insurance comparison websites drew attention to policy features, the details were always contained in small print under terms and conditions. This they said was misleading to consumers which hinder them from making an informed choice about the insurance product they were looking to purchase.
Insurance comparison websites are not new to criticism having previously been accused of bad practice by the British Insurance Brokers’ Association. Concerns have also been raised by both Defaqto and the Centre for Competition Policy over levels of accuracy and disclosure of policy features.
FSA said that the excess levels were not made clear on a number of sites and in some cases the information was either incorrect or out-of-date. They warned consumers against focusing on the price and encouraged them to shop around for the best deals.
Ed Harley said, “we recognise that many consumers use these websites to search for insurance products. Consumers should shop around for the best deal, but it is important that they compare what is covered by a policy, and not just focus on the price.”
FSA says that it will be following up this review by visiting individual firms to test whether the information they provide on their website is appropriate.
The regulator has also provided examples of good and bad practice in order to help firms meet the standards it expects.
The move is seen as a measure to protect consumers visiting the insurance comparison websites. Reports indicate that last year an estimated 30 million motor quotes were obtained from insurance comparison websites.
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