Are price-comparison sites the real deal?
The services themselves might need comparing as we search for the best-value quotes, writes Paula Hawkins
Sunday 23 September 2007
Almost every month, it seems, a new price-comparison website is unveiled, promising to scour the market for customers and find the cheapest and best insurance quote.
The rivalry between these services is intense – particularly now supermarket giant Tesco has entered the fray – with Gocom-pare.com, Insurancesupermarket and uSwitch all advertising themselves as better, faster and cheaper.
But are these sites as good as they are cracked up to be? Do they deliver on their promises? And just how objective are they?
Price-comparison sites make a big play of their impartiality but most of them are not independently run. Confused.com, for example, is owned by insurer Admiral, while Comparethemarket.com is owned by the Budget insurance group.
"Confused.com will push you heavily towards its brands, as will Comparethemarket.com, as will Tesco," says Richard Mason, managing director of Insurancesupermarket. However, the implication that customers are shepherded towards products offered by the insurer that owns the site is firmly denied by Insurancesupermarket's rivals.
"You can stay impartial," says Debra Williams, managing director of Confused. com. "We treat Admiral exactly the same way as we would any other insurer."
A common complaint about the websites is that the price first quoted to users changes significantly once they have clicked on the quote and been passed through to the insurer. But Mr Mason says this is not the fault of the sites: "In- surers try to bolt on all sorts of extra features to boost the price they get, so they'll add legal protection cover, an extra cost for paying monthly and so on. It's up to the consumer to strip out all those extras when they make their application."
How the comparison services make their money could have a bearing on the user experience. The sites receive upfront fees or retainers from the insurers they list, but they will also earn commission for sales or even just "clicks".
"Some comparison websites are paid by insurers according to the number of clicks they receive, regardless of whether a sale is made," says James Harrison, chief executive of comparison site Insurancewide. The distinction is important, he adds, because if a site is paid per click, there is less pressure to match consumers with the right deal for them.
Another point to bear in mind is that some sites, such as uSwitch, allow users to tailor their quotes through a system of "filters". This can mean that the quote the user is presented with is not necessarily the cheapest.
Filtering gives customers the opportunity, for example, to strip out all motor insurance quotes that do not include a free courtesy car in case of an accident.
The launch of TescoCompare.com, which will offer only car quotes at first, looks set to shake up the comparison market.
Crucially, Tesco has persuaded Royal Bank of Scotland (RBS) to allow some of its big-name insurance brands, including Privilege and Churchill, to be listed. Previously, RBS had refused any attempt to put its brands on comparison sites. However, it has stopped short of letting the jewel in its insurance crown, Direct Line, on to the Tesco site.
Tesco Compare's competitors point out that it will compare just 30 insurance brands – a quarter of which are owned by RBS. This is a much smaller field than on Insurancesupermarket or Confused.com.
Ultimately, though, no single site covers the entire market. Perhaps the best option is to use a range of sites – in effect, comparing the comparison sites.
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