Price comparison websites: How to get a good deal
Wednesday, 28 October 2009 10:37
It seems like a bygone age when, to track down a decent insurance quote, we would set aside a rainy afternoon, wade through the yellow pages and endure a thorough grilling from every insurer in the book.
Thanks to the rise of price comparison websites, this painstaking process has become a thing of the past for most of us.
Anyone with a computer and internet connection can bring up a list of quotes, as if by magic, at the touch of a few buttons. You need only type in your details once for the website to bring up a roll of the cheapest policies and details of their features which you can compare on a like-for-like basis.
It's a far cry from the constant repetition of your name, address, claims history, mother's maiden name... dress size. (Or that's what it felt like).
With the world of price comparison sites, there's no need to talk to anyone, write down reams of information or sign up to anything you don't want to.
However, as with all things which sound too good to be true - there are pitfalls with using these sites, snags which have recently been brought to light as the websites rise in prominence.
One of the downfalls of many comparison sites, it has emerged, is they don't provide quotes from all the insurers on the market.
So, if you use a website to find the best travel insurance deal, you might only receive quotes from companies with whom the website has a business agreement.
These commercial relationships between insurers and the websites mean when certain policies are highlighted as "best buys" or "editor's choice" this probably means the site has struck a lucrative deal with the insurer.
It does not necessarily mean this is the best deal for you.
What's more, many critics of the comparison sites are concerned they do not provide enough information to consumers on the details of the policies.
Website users aren't always provided with the full lowdown on the policy. This means, some people might be signing up to policies they don't understand.
In fact Eric Galbraith, chief executive of the British Insurance Brokers' Association (BIBA) went as far as to say he was not entirely convinced customers were being treated fairly by the price comparison websites.
"Since early last year we have been calling for guaranteed premiums, the use of facts and not assumptions as the basis for quotations of what the policy does and does not cover and the differences between each insurance policy made clearly visible," he says.
Mr Galbraith referred to research which found 94 per cent of people using comparison websites felt they had not been properly explained what their policy did and did not cover.
The survey, conducted in 2008, found 59 per cent of website users did not think it was obvious who a policy was underwritten by and 63 per cent said they were "nervous" about using a price comparison site.
Then, earlier this year consumer watchdog, Which?, published details of an investigation which revealed six of the most popular comparison sites did not clearly display excess charges for home or car insurance.
Which? researchers found they were given a list of the cheapest premiums, but often these were for policies with excesses which were much higher than those they had requested.
Jess Ross, editor of which.co.uk, explains: "Comparison sites sell themselves on having all the information in one place and being easy to use, but we found the way they display excess charges means it's difficult for people to make informed decisions."
Ms Ross offers good advice to users of these sites, which is to shop around. Try using different websites, and don't just stick to one.
She adds: "Don't be fooled into thinking online comparison sites are a one-stop-shop - customers need to search around different sites and keep their wits about them."
So, while it's important to exercise a level of caution when using the sites, there's no need to abandon them altogether.
It is still widely considered that these sites have revolutionised the insurance industry. So instead of warning consumers away, an organisation has just been created to police comparison sites and to ensure customers get a better deal.
The Comparison Consortium was established to regulate the online price comparison industry and has just published its code of practice.
Member websites, who have agreed to abide by the organisation's principles, will carry the Comparison Accreditation symbol. So look out for this when choosing the comparison site to get quotes from.
It means they will have signed up to the code of conduct which requires them to be transparent, work in customers' interests. It means, if you have a problem, you will be able go through a complaints procedure.
Sean Garner, head of the Comparison Consortium, says it will be consulting with the Financial Services Authority (FSA) to ensure standards were maintained.
And he vows to develop and enhance the comparison industry in the future for the benefit of consumers.
"We aim to make clear to consumers what they should expect from price comparison websites, and we will work tirelessly to improve standards by promoting best practice," he says.
But, despite this, as consumers we still have a responsibility to ourselves to find the best insurance policy and therefore learning how to use these websites to our advantage is essential.
We have already mentioned the importance of visiting several price comparison sites. There are more than 40 in existence, so it's worth trying a handful of these.
Which? said once you have found your ideal quote on one of the price comparison websites, go to the insurer directly, tell them your best result and see if they can do any better.
It also urges website users to check the information they entered themselves into the website - such as what excess they require or what cover they need - matches those on the results page of the website.
And it also warns that many websites may not identify compulsory excess charges. So, before you sign up for the deal, make sure you find out what the excess is so you know what you'll have to pay before you make a claim.
It seems the websites are starting to improve and boost their offerings and provide a more transparent service. Moneysupermarket, for example, recently unveiled improvements to its home insurance offerings.
And it is promoting the message the right insurance product is more important than the cheapest.
The firm's managing director Andy Leadbetter, says: "Increasingly customers are looking to purchase a value for money product. This might not be the cheapest, but the policy which offers them the best combination of price and features."
And with the newly introduced code of conduct, it would seem many more - if they are not improving principals already - look set to follow suit.
Kate Saines
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