Having experienced how comparison sites work from the inside, some might expect me to be critical of their entire approach. After all, in some journalists’ eyes – and certainly those of many insurance brokers – financial comparison sites are the devil in disguise.
A classic example of this came last week when the British Insurance Brokers’ Association called on the FSA to “urgently review its insurance conduct of business rules for electronic introductions” after a poll carried out among users of comparison sites.
Among key elements in the research commissioned by Biba, the trade body found that more than half of insurance buyers do not fully understand the differences between each insurance policy offered. Only 6 per cent of insurance comparison website users believe that the details of what the policy covers and does not cover are explained fully.
Eighty-four per cent of insurance buyers say that the details of insurance policies offered via price comparison websites can be confusing.
In essence, what we are being told is that if you use a nice insurance broker, the chances are that you will get much better service, what you are buying will be explained to you in much more detail and there is a strong chance that you will get a great deal.
In reality, the days when your friendly local broker could solve all your problems are mostly over. Last week, I had to renew my car insurance. My renewal quote from Norwich Union was about 440. It was clearly in my interests to shop around.
As it happens, I decided to stick exclusively with all the price comparison sites to see what deals were on offer. Within 10 minutes, I was being offered quotes as low as 308. After about an hour, the best deal on offer was 281, which I decided to take.
Ten minutes after that, my insurance was renewed for another year. At the same time, I decided that I was sick of paying Norwich Union 130 a year for my annual car breakdown cover. Another five minutes later and I had exactly the same deal for 35.
One of Biba’s complaints – and that of some journalists who have written on this subject in the past – is that the initial quote you get is not the one you end up paying. Well, that is not my experience.
In two of the quotes, one where I took the cover out and another where I went almost all the way through the purchase process, the amount quoted was the price payable.
At which point, you may be asking, what about my friendly insurance broker? Funny you should ask because one of the comparison sites has this facility whereby they ask you for your phone number and within 10 minutes you get a call from one of their operators asking if they can put you through to a selected broker who will “probably be able to match or even beat the lowest quote provided online”.
I got passed on to a firm, which it transpires is based about five minutes down the road from where I live. The broker who spoke to me was really proud of this fact and it was certainly a great way of establishing empathy between me and him.
Unfortunately, things on the quotes’ front were not quite as great. Not only was he unable to come within 100 of the cheapest quote but in the process of getting it – cue 10 minutes of telephone music – I had printed out all the details of the one I ended up buying.
Not only were its benefits identical or better than the one on offer from “my local broker” but he also did not really know what his own policy’s terms and conditions were anyway. So much for Biba’s ideal of better, more personal and appropriate cover.
Why is Biba making such a fuss about comparison sites? My guess is that while 20 years ago, the launch of Direct Line led to brokers gradually being pushed out of the personal lines market by direct insurers, price comparison sites are the final straw.
Moreover, Biba is waking up to the possibility of similar – if more limited – damage being done to its members in the commercial lines market so it uses crass surveys to try and prove its point, as if this will really halt the onward march of comparison sites. The fact is that Biba does not stand a chance.
At which point, you may be wondering two things – what was my experience of working at money supermarket.com really like and did it supply the cheapest quote in my quest for cheap car insurance?
The answer to the first question is that, perhaps surprisingly for some outsiders, I enjoyed most of my time there although to know more you will need to buy me a pint.
As for the best quote, my former colleagues will be disappointed to learn that it was not their site that provided it. The best quote came from confused.com.