The British retailing giant Tesco will launch into the crowded online financial comparison market tomorrow, pitting itself against the likes of Confused.com and Moneysupermarket.com, with a new motor insurance broking service.
Tescocompare.com will offer quotes from some 25 different insurance brands – including Churchill and Privilege, both owned by the Royal Bank of Scotland, which have until now refused to co-operate with the growing number of financial comparison sites.
Royal Bank of Scotland – the UK's largest retail general insurer – is Tesco's joint venture partner in its financial services division, and will be the underwriter behind around a quarter of quotes from its comparison site. As well as offering quotes from Privilege and Churchill, it is also the underwriter behind Virgin Money, Lloyds TSB and Nationwide – all of whom will also be featured on the site.
The one absent brand from RBS's stable is Direct Line – which has run an aggressive advertising campaign criticising comparison sites in recent months. However, it will effectively be represented via the Virgin Money brand, which simply white labels its prices.
"Our customers have been telling us they want more help in choosing their motor insurance," said Peter Dingle, managing director of Tesco Compare. "They want more than just the usual 'shop around' tool for insurance premiums. We have placed great emphasis on the fact that our site not only compares price but also looks at individual policy features to allow users to make sure they are getting the right policy for them. There will be no extra costs or charges when it comes to paying your insurance, the price quoted will be the same as if the customer went direct."
Tesco Compare's rivals were quick to criticise the new venture. Debra Williams, managing director of Confused.com, said the fact RBS would be behind a quarter of the quotes was a sign that the site had gone for "brand over breadth". "In our experience, best prices often come from smaller insurers who can provide consumers niche pricing," she said. "Unless Tesco significantly increases its panel of insurers, it's highly likely that many, perhaps even most, of its customers are missing out on the cheapest deals."
Hayley Parsons, the founder of Gocompare.com, added: "You still have to ask yourself why RBS Insurance is choosing to protect its flagship brand Direct Line from the full glare of online comparison. With the greater transparency of comparison sites; price, cover levels and value for money are all fully exposed. It is going to be interesting to see how they stack up against the dozens of brands that have been competing on comparison sites for a number of years."
Comparison sites compared
The number of financial comparison websites has grown exponentially over the past two years, as more and more consumers have begun to feel more comfortable shopping for everything from motor insurance to flights to white goods on the internet.
Most of the financial websites make their money by taking commission for every sale they generate – although some get a commission merely for every click they send through to another site. Several comparison sites controversially provide more prominent positions in their league tables for those who pay them the most money – prompting calls for better regulation of the industry.
In the financial services sector, Moneysupermarket.com is the largest, floating for close to £900m this summer, while Confused.com has grown to become one of the biggest names in the motor and home insurance markets. Sites such as Uswitch.com and Simplyswitch.com made their names comparing energy prices, but now offer several financial services lines as well.
In the home shopping arena, Kelkoo.com and Pricerunner.com have grown to become the biggest names, while Google's froogle.com has also started to compete in this market.
Travel sites such as Ebookers.com, Expedia.com and Lastminute.com have now been well established in the industry for several years.