A lot of people now use comparison sites to purchase their breakdown cover: last year, 30 million quotes were supplied, and four out of ten motor policies were bought through comparison sites.
If we don’t buy through them, we at least use them to see whether or not the price we’ve been quoted seems fair. We have a tendency to manipulate our findings into regulatory standards of fairness, awarding those who come out on top with our custom – but who regulates the regulators? Who ensures that their quotations are accurate? That we pay what we think we’re signing up to pay?
Leading on from the questions this raises, we must begin to consider the outcome of placing so much faith in the validity of the information we receive, and ask what the true cost of using comparison sites is: do they really save us as much money as we believe, or are we following the advice of a false authority?
The Findings of the FCA
The Financial Conduct Authority (FCA) recently carried out a study which highlighted a number of problems with the quotations offered by 17 popular comparison sites. Their review found that firms often failed to specify the assumptions upon which their quotations were based, and often disregarded the level of excess as a factor when compiling their figures. Many of the companies offering breakdown cover at a low price had an excessively high excess which the owner of the vehicle would be required to pay in the event of a call-out. This is critically important information, as excesses and assumptions radically alter the price of cover.
A major problem is that the majority of motor insurers have a compulsory excess which their clients are unaware of, with their voluntary excess being added on top. This means that consumers who set a voluntary excess of £300 may find this combined with a compulsory excess of £300, and are thus obliged to pay the first £600 in the event of a claim. Moneysupermarket.com, the largest comparison site, sets an automatic excess of £500 to ensure that their prices are competitive. This can be altered by the customer, but many people don’t realise that gaining accurate quotes first necessitates them to adjust pre-existing excesses. This obviously means that the dazzlingly cheap policy that entices consumers to buy fails to be cost-effective in the long run.
The accuracy of the quotations is further skewed by a series of assumptions used by sites to speed up the process and produce competitive figures. If these are not checked and changed where necessary, the quote will be inaccurate and the consumer will have provided false (and, incidentally, fraudulent) information. Where these are corrected, prices may soar. For instance, if you submit a claim based on the (false) assumption that you have a clean licence, your claim will be rejected and your premiums increased when the correct information is provided.
Speaking on the subject, a FCA spokesman maintained that there had been significant improvements since the previous review in May, but acknowledged that specific concerns still needed ironing out. Moneysupermarket has also recognised these problems, and will introduce new versions of some of their pages with no assumptions and the excess clearly spelt out on the results page before you buy. Gocompare.com and Confused.com have already implemented similar systems.
The aim of comparison sites is obviously to attract customers on the lookout for a good deal. They need their prices to seem as low as possible to achieve this. If you’re wise, you’ll bear that in mind when using such sites. Be clever, and you’ll find that there are some easy ways to ensure that, in your haste to find a good deal, you don’t rush headlong into the trap of falsely cheap quotes. Always remember to untick the preference boxes provided to ensure you get a quote without any pre-selected extras added on. Use more than one comparison site to ensure that the figures are accurate, and visit the providers directly too – you could be paying a hefty amount of commission without even realising it. Finally, bear in mind that a large amount of the revenue brought in by comparison sites comes from businesses that pay them to list their policies at the top. Remember this, and you won’t be fooled into believing that the ‘best seller’ online is the best seller in the real world too.