EXCLUSIVE: The damning verdict on aggregators

Robyn Hall

August 11, 2014

Having reviewed 14 price comparison sites offering insurance policies, the FCA has found that many are unclear with consumers left focusing on price and brand instead of policy terms.

The regulator also found that many consumers mistakenly believed that these sites had assessed suitability of cover and provided them with quotes based on the best policy for their needs.

I’ve been a vocal critic of these sites for some time now – sure, they have their place and it is absolutely right that consumers have choice as to how they source and buy their insurance, but the dark arts that these sites employ have been ignored by the regulator for too long.

Hopefully the FCA’s report will make those sites it reviewed sit up and listen but unless some enforcement action is taken, I fear that aggregators as a whole will continue to promote price over quality. After all, it’s clear from this thematic review that many have failed to implement guidance issued by the then FSA back in 2011.

Intermediaries have continued to fight the good fight and have, according to Mintel last year, increased their share of the household market. I think the damning evidence produced by the FCA provides you with a further opportunity to educate your clients and prospects as to the tricks these sites employ to draw custom to their door.

First and foremost, there is a need to get across the fact that these sites are not product comparison websites currently, as consumers appear to believe. They do not assess the individual needs of each consumer and produce quotes for policies that meet these needs – something that intermediaries have to do thereby guaranteeing the customer they’re being offered a range of options that will be suitable for their individual circumstances and budget.

Secondly, the whole issue of price needs to be addressed. Consumers may think they are getting the cheapest deal because they have selected a policy with the lowest annual premium – however if they want to pay monthly, they could be paying considerably less if premiums were ranked in order of monthly payments. Currently there is often a gap between the premium displayed and what the customer actually pays. Comparing annual and monthly premiums for the policies they recommend to their clients is something that intermediaries do as a matter of course.

Thirdly there is the very serious issue of ensuring that consumers are buying a policy that will be there when they need it. The FCA found that the aggregators it reviewed did not regularly assess if the insurance providers continued to hold the appropriate permissions. Without the appropriate checks being made regularly, these sites expose consumers to the risk that they may enter into an insurance contract with or through an unauthorised entity under which there may be no regulatory protection – potentially leaving them high and dry if things go wrong. By using authorised general insurance providers such as the Source, intermediaries can be confident that they will be recommending policies from blue chip and regulated insurers.

A level playing field is need to ensure consumers receive the same level of detail to allow them to make an informed decision when it comes to their household – and other – insurance is a must.

I hope the FCA takes the necessary steps to ensure that aggregators have to follow the same checks and balances as intermediaries… but I’d also recommend that intermediaries make their clients fully aware of the tricks these sites use to continue to not only protect their customers but also grow their share of this market.

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