Cover blown open

Online insurance is growing in popularity. But can it be trusted?

When it comes to buying insurance, online super- markets are the new obsession of the financial services industry. Each site claims to be independent, offering quotes from a range of insurers, enabling customers to find the best price without the hassle of having to contact each company separately.

When it comes to buying insurance, online super- markets are the new obsession of the financial services industry. Each site claims to be independent, offering quotes from a range of insurers, enabling customers to find the best price without the hassle of having to contact each company separately.

The number of people enquiring about insurance on the internet accounts for one-third of all personal finance enquiries online, according to find.co.uk, the financial website directory.

Internet bank Egg hopes to cash in on this demand - it launched its own car insurance supermarket on Friday. But there are already doubts about just how autonomous the site really is. The best quotes we got came from - surprise, surprise - Prudential, its parent company.

Egg says this is pure coincidence, stressing that the site is completely independent. "We have carried out significant testing, the results of which suggest that the Prudential will not be underwriting the majority of [the site's] business," says Phil Ashkuri, deputy director of Operations at Egg Intermediation. Egg will not reveal who it does expect to underwrite the greatest proportion of its business, although Equity Red Star is a possible candidate.

The Prudential denies that there is anything untoward about the tactics being employed to provide quotes. "The motor insurance market is extremely volatile but, unlike many of our competitors, we have not seen our premiums rise in recent months," says Nigel Bruce, head of product marketing at Prudential. "In particular segments of the market we are very competitive and are delighted that, with the quotes you got, you have identified the areas in which we are particularly competitive."

The difference between the quotes on the Egg insurance supermarket is significant. One of the quotes - from Prudential - was £230 less than the next best quote, from Equity Red Star. Rivals claim Egg could be operating the site as a loss leader, a process whereby providers initially lose money on certain products in order to attract customers.

"This doesn't indicate an independent site at all," says an industry insider. "It looks as though they're going to be pushing their own products and are governed by their parent company. The proof of the pudding will be whether they can keep their customers."

In a notoriously fickle market, Egg has seen customers abandon its savings accounts in droves after rivals introduced better interest rates. Egg has also suffered with its credit card - the interest rate crept up from 9.9 per cent annual percentage rate (APR) to 10.9 per cent without warning.

Egg hopes to build a comprehensive financial supermarket providing customers with a full range of financial products. Egg will also offer home and travel insurance by the end of the year.

"We want to bring best-of- breed products on to our supermarket shelves," says Alistair Milne, chief executive of Egg. "Our quotation system makes the whole process of shopping around for insurance quotes much less onerous. We will be setting the standards and are concentrating on ease of access, navigation and strong price competition."

Egg is so confident that its panel will provide quotes which are market leaders that it offers a price guarantee. Anyone who finds a cheaper quote elsewhere will be refunded the difference, plus £1. Its panel consists of nine insurance providers, including Prudential, Equity Red Star, Groupama, Norwich Union and Royal Sun Alliance. This is quite limited but Egg claims it is adequate. Screentrade, another online supermarket, disputes this. It has 22 members on its panel. "We will extend this further in the next month so we can give better prices and even more choice," says Paul Charles, editor-in-chief at Screentrade.

Screentrade has a price promise and is confident it can provide leading premiums. It will be adding a link to Egg's site so that customers can compare quotes. "We are confident our quotes will remain the most competitive," says Mr Charles. "We'll add Egg to the list of competitors on our site and I challenge Egg to do the same."

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas