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Avelo warns OFT could block price comparisons on portals

Avelo believes the Office of Fair Trading may look to prevent portals from collating and comparing specific provider pricing on products such as protection policies and annuities.

In January, the OFT published a consultation paper with proposals to ban price-sharing practices in the motor insurance industry amid concerns about market collusion.

The consultation paper says: “The information exchange relates to highly individual- ised, commercially sensitive pricing information that enables insurers (through reverse engineering) to discern their competitors’ confidential commercial pricing strategy (as well as their individual prices for hundreds of thousands of different risk profiles).”

The proposals require portals to make pricing information anonymous and based on averages across at least five providers.

Avelo says the same rules could be extended to include portals comparing protection and annuity products.

Head of provider relationships Dave Miller says the changes would be detrimental for consumers. He says: “If providers cannot analyse their prices to the same degree they are probably not going to be able to keep their prices as competitive, which would mean the client loses out.

“We are as certain as you can be that there will be an impact on our industry, it is just a case of waiting to see the extent of that impact.”

Zurich protection management director Peter Hamilton says: “There has been no collusion before and transparency of pricing has actually driven costs down. There is no evidence to suggest these changes would make things better.”

Finance and Technology Research Centre director Ian McKenna says: “It is a case of a governing body going over the top and unintentionally disadvantaging consumers.”

The OFT declined to comment on the issue.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. These appear to be the actions of the inhabitants of an asylum as it is obvious that insurance companies as a whole already know what the opposition is doing. As you’ve quite rightly pointed out the only people that are likely to suffer are the consumers and that’s exactly who professional IFAs are trying to help—-perhaps the OFT will grant a waiver to those portals that are only accessible to industry qualified and registered professionals

  2. Crazy. Will the OFT ban all Heinz employees from shopping at their local supermarket in case they see what prices their competitors are chraging?

  3. Another case of a Govt dept meddling in matters that dont need meddling in, consumers will loose out ultimately.

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