For immediate release: THURSDAY 8 MAY 2008
BIBA welcomes FSA review of insurance comparison websites.
The British Insurance Brokers’ Association (BIBA) has responded to the Financial Services Authority’s (FSA) review of insurance comparison websites by calling on the regulator to ensure that consumers using this technology are provided with clear, fair and not misleading information.
The review was launched after research, commissioned by BIBA, which showed potential for serious consumer detriment across insurance comparison websites. In particular, the research showed that 84% of insurance buyers said that the details of insurance policies offered via price comparison websites can be confusing.
Graeme Trudgill, BIBA’s Technical and Corporate Affairs Executive, said: “BIBA welcomes today’s review from the FSA, and agrees with its core recommendations which are designed to offer greater consumer protection. We believe that price comparison sites should implement these changes immediately.”
Steve White, BIBA’s Head of Compliance and Training, added: “This is a great start, but the FSA must go further. Like brokers, comparison sites should guarantee their quotes.
“We are pleased that the FSA is calling for comparison sites to give more information to consumers so they understand how their premiums are being calculated, their scope of cover and the level of excess on their policy.
“We are also delighted that the FSA has stressed the importance of advice when purchasing insurance. It is vital that consumers focus on the level of cover provided by a policy, not just the price. Calling a broker is the simplest way for consumers to get this advice, ensuring they get the right cover at the right price.”
Notes to Editors:
1. Contact
For further information or to arrange an interview with Graeme Trudgill or Steve White, please contact Leighann Burtrand on 020 7397 0223 or 07917 738727
2. Click here to view the FSA’s review of insurance comparison websites.
3. About BIBA
BIBA is the UK's leading broker and intermediary organisation, representing professional insurance brokers and intermediaries.
BIBA is committed to playing a central role in the industry, from providing business backing and training for British brokers through to high-level industry representation. We also actively participate in helping the industry and its customers deal with some of the major insurance issues of the day.
BIBA members operate to a very high standard of customer service with the aim of ensuring peace of mind, security, financial protection and the professional advice required.
Authoritative, independent and impartial, BIBA, a not for profit organisation, is uniquely relied upon by brokers and the consumer.
To find your nearest BIBA broker visit the ‘Find A Broker’ section of the BIBA website, www.biba.org.uk.
4. BIBA’s extended response to the FSA review of insurance comparison websites:
The FSA has made five major points about the kind of behaviour it expects from comparison sites, these are:
1. “Assumptions must be reasonable and clearly highlighted to consumers.”
BIBA agrees with the FSA, that if assumptions are being made in order to generate quotes, customers must be informed about which assumptions are being made. This will allow customers to be transparent themselves when providing information.
Some comparison sites do not use assumptions at all; BIBA believes this is the best possible method for generating quotes.
Consumers should also be made aware of the extent to which aggregator sites cover products available in the market as coverage may not be as wide as a consumer assumes.
2. “Sites comparing a limited number of features, and in particular where comparison is only on the basis of price, should explain to consumers in a clear and timely way that the products being compared may have different features, and that features, other than price should be taken into account before purchasing a policy”
BIBA believes there is too much pressure on consumers to focus on price, and not the level of cover provided by a product on comparison sites. Consumers should be able to compare like for like products, the appropriate level of protection is vital.
Insurance brokers offer the necessary advice to help clients achieve the best cover for them at the best price.
3. “Firms should have processes in place to ensure that all information is provided is
correct and updated on a regular basis. This includes an expectation that firms will have systems and controls in place to ensure that the information provided by consumers is correctly relayed to the broker or insurer.”
BIBA is concerned about the incorrect and out of date information uncovered by the FSA review. These inaccuracies are inexcusable and the offending sites must ensure the correct information is made available as a priority.
4. “Firms should take a consistent approach to the provision of information, and the basis for providing certain pieces of information should be clearly explained to the customer.”
BIBA’s members already comply with this statement and believes that all consumers should have access to information about their policy wherever they purchase their insurance.
We need a level playing field across the industry, ensuring that all insurance providers offer the same level of information to their customers.
The FSA highlighted a number of particular concerns – specifically around the uses of excesses. BIBA raised this issue following much customer confusion. BIBA is now calling on the industry and the regulator to ensure that comparison site customers have a better understating of what they will be liable for in the event of a claim. This is a service that brokers already deliver.
5.Firms should not give a misleading impression of their market coverage.
BIBA completely agree with this important point. No single comparator covers the whole market and brokers deal with many products that do not feature on comparison sites.
Conclusion
In summary, BIBA is pleased that the FSA has responded to its call for a review. It hopes that those operating the sites will now take action and that “poor practices” are stamped out. BIBA would also like to see proper systems and controls put in place to prevent incorrect and out of date information being given to customers as the FSA identified.
We also hope that the series of thematic firm visits that the FSA has promised to undertake as a follow up to this review show a marked improvement on the findings from our initial research in this market.
BIBA supports the sales of insurance through comparison sites but believes a minimum set of standards is essential to ensuring that consumers purchase cover which meets their needs. BIBA offers its support in helping to develop these standards going forwards.
- BIBA Market Research into Insurance Price Comparison Websites
In January 2008, BIBA published market research conducted by FWD research which showed that:
- Over half of insurance buyers interviewed believe that customers do not fully understand the differences between each insurance policy offered via comparison websites
- 94% of insurance comparison website users do not believe that the details of what the policy covers and does not cover are explained fully
- 84% of insurance buyers said that the details of insurance policies offered via price comparison websites can be confusing
- 93% of consumers believe that insurance comparison websites should be regulated in the same way as insurance intermediaries
- 63% of buyers are nervous about purchasing from comparison websites
- 59% of insurance comparison website users believe that it was not very obvious or not obvious at all who the policy was underwritten by.
Click here to view the BIBA press release from January 2008 |