New warning over price comparison sites

12 November 2008
Insurance price comparison websites have been rebuked by the financial watchdog for making assumptions about their customers’ needs.

In its latest review of the sector, the Financial Services Authority (FSA) expressed concern that some websites still rely on assumptions when providing quotes to customers. It also said some websites don’t offer enough information on the level of excesses that apply to insurance policies.

The findings are the latest in a series of FSA investigations into price comparison websites, specifically ones offering insurance products, amid concerns they offer inconsistent results and leave people confused about what the best deal is for them.

While the FSA’s latest review concludes that most websites have made significant improvements to offer clear information to customers, it says many need to go further.

Dan Waters, director of retail policy and conduct risk at the FSA, says it is “imperative” that all comparison websites provide clear information to customers.

“We would certainly encourage people to shop around to find the best insurance deal for them, and recognise that many people use comparison websites to do this,” he adds. “It is important to reiterate that people should compare what is covered by a policy, to ensure that it meets their requirements, and not just focus on the price.”


As recently a two years ago, several comparison websites made a host of assumptions when providing quotes – for example, assuming policyholders were the main driver of a car and that the car being insured was the only vehicle owned.

Although most have upped their games since, some continue to make assumptions about customers. For example, that people are UK residents.

Defaqto, a financial data provider, says its own investigations into price comparison websites have found a number of sites continue to make assumptions when offering quotes. For example, some will automatically assume drivers have no previous claims history or a motor conviction by pre-ticking the question as “no”.

Mike Powell, a consultant for general insurance at Defaqto, says that assumptions leave the insurers open to abuse as much as it puts consumers at danger of buying unsuitable cover.

“[Assumptions could] mean that incorrect information is passed to the insurer and at claim time a claim could be refuted and the policy cancelled, as it would appear that the consumer has failed to provide the correct information,” he explains.

One of the biggest problems about assumptions is that they aren’t always made clear to customers.

Carlton Hood, chief executive officer of, says: "You can alter the price of a quote substantially if you apply certain assumptions.”

While the FSA’s review focused on price comparison websites, Hayley Parsons, chief executive officer of, believes assumptions are a problem that concern the entire insurance industry.

“Insurance companies also make assumptions about people when giving quotes so this is really an industry-wide problem,” she says.


The other concern the FSA has with insurance price comparison websites is the way excesses on insurance products are explained to customers.

Websites such as display the total amount of excess a customer would pay on claims, rather than breaking it down to show the compulsory excess and the voluntary excess.

Parsons says: “We need insurance companies to tell us both the compulsory and the voluntary excesses on policies, but as not all of them do we have no choice but to display the total excess – for comparison purposes this is the only fair way to do it.”

She believes that although the FSA’s investigations have helped clean up the price comparison sector, it now needs to look at the entire insurance sector and consider setting stricter rules on the information insurance companies must supply to websites.

Another problem with price comparison websites, is the fact that many continue to default to higher voluntary excesses in order to display cheaper premiums.

Defaqto’s Powel says: “Another area where we have raised our concerns is the total disregard by some aggregator sites who will automatically display premiums based on a higher voluntary excess to what was originally requested by the consumer.”

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