Though it had checked the industry as recently as last year, the
FSA responded to British Insurance Brokers' Association research
indicating problems in the market by conducting an analysis of
websites which compare insurance products and prices for
customers.
"There was mixed evidence in terms of the clarity, fairness and
accuracy of the information given to customers," said the FSA in a
statement. It said that the review had "found evidence of both good
and bad practice" in the industry.
The aggregation industry, in which companies build websites
which fetch prices for a service from other companies' systems, is
now a huge one, and the insurance industry is one in which
aggregation has become especially popular.
The FSA review, though, found that some of the sites did not
make their comparisons properly, relying solely on price as a
comparing factor and denying customers other vital information
about insurance products.
"A number of firms provide consumers with key information about
the products and services available from the site, or the basis on
which quotes are provided, before providing consumers with the full
list of quotes," said the report. "By alerting consumers to the
fact that they need to consider factors other than price, consumers
are more likely to be able to make a judgement on whether the price
quoted is acceptable, taking into account other relevant
factors."
"However, we also reviewed sites that contained warnings or
prompts, but didn't provide consumers with sufficient information
to act," it said. "In one case, we were advised that assumptions
had been used to generate the quote, but were not given the
opportunity to review them."
The review found that only a few of the examined websites
alerted customers to the fact that many factors will govern how
suitable a product is for a customer and that not all of these
features may be listed.
"Of the websites reviewed, only a small number of firms provided
this information," said the report. "Where it was provided, it
tended to be embedded in the Terms and Conditions. We would expect
this to be given more prominence on the website."
Such vital extra information includes details of the excess due
on any claim. The FSA said that it had found examples of quoted
excess figures being substantially incorrect, and other examples
where details given were misleading.
Insurance law expert Liz Johnson of Pinsent Masons, the law firm
behind OUT-LAW.COM, said that the research demonstrates how
seriously insurers must take their responsibilities.
"From the point of view of insurers and brokers, the important
point is that they must not overlook their obligation to treat
customers fairly just because the business comes to them via a
comparison site," she said. "They still need to make sure the
customer is given enough information about the cover to make an
informed decision."
The aggregation industry is growing quickly. Research recently
produced by Datamonitor said that almost a quarter of all consumer
car insurance was bought through aggregators, and that 30 million
car insurance quotes were generated last year by aggregators.
The FSA said that it will check again to see if sites improve
their performance.
"We expect all comparison sites to review their websites and
make the necessary changes to ensure that they are clear, fair and
not misleading," it said. "We will be following up the website
review with a series of thematic firm visits to test whether
individual firms are meeting our expectations".
Want more content like this? This story was written by the insurance and reinsurance legal experts at Pinsent Masons, the law firm behind OUT-LAW.COM. We've recently launched a new section, legal info for Insurance and Reinsurance, giving free legal information to anyone working in that sector.
