Insurance comparison websites urged to adopt new practice standards

The voluntary guide supplements current regulations requiring firms to treat their customers fairly and provide information in a way that is clear, fair and not misleading.

In May 2008 a Financial Services Authority (FSA) review found that many insurance comparison websites failed to give customers the information they needed to make informed decisions. A follow-up review six months later found that standards had improved, but the FSA still had concerns about aggregators' use of assumptions during the quotation process.

In motor insurance, for instance, common assumptions are that the applicant will be the main driver and will not be using the car for commercial purposes. The review found that such assumptions were not always set out clearly and were often difficult for the customer to find, let alone correct.

The regulator was also concerned that some sites failed to make it clear how much of the quoted excess was compulsory and how much voluntary.

The ABI's good practice guide is the result of discussions with the British Insurance Brokers Association, leading comparison websites, the consumer group Which? and other stakeholders.

It sets out "a series of high-level standard insurers, brokers, comparison websites and software houses should seek to achieve in order to ensure customers have positive experiences when they buy general insurance products online".

Although most of the recommendations are aimed at comparison websites, they apply to any online distributor of insurance products, as well as to insurers and brokers, who will need to ensure they provide enough policy information to enable websites to comply with best practice.

For example, the guidance suggests that results pages should break down the total excess into its compulsory and voluntary components and, where applicable, display excesses for all those covered by the policy (such as young named drivers), not just the policyholder. Where different excesses apply for different aspects of the cover, these should also be made clear. 

In addition, all returned quotes "should be based on accurate data about the customer". Ideally, the applicant should be required to answer every question and "default answers" should be avoided. Where assumptions are made, these should be made clear to the customer at an early stage and the customer required to confirm they are accurate.

Online distributors are also warned to make sure the "helpful hints" on their websites do not encourage customers to enter inaccurate information. Examples given include suggesting that where the vehicle is kept overnight or a different main driver could lower the premium.

Other issues include ensuring quotes only include the "add ons" the customer has requested and displaying clearly all the key features and exclusions of the cover and the total price.

There is also a section on helping non-standard customers, such as older customers or people living in high-risk flood areas, find cover, either by setting up referral arrangements with other distributors or by providing details of organisations that might be able to help. Firms should, however, ask the customer to consent to their details being passed on to a third party or, at the very least, highlight when details can or have been transferred.

Nick Starling, the ABI’s Director of General Insurance and Health urged all online insurance providers to adopt the guidelines without delay.

“Using the internet can enable consumers to get the best policy at the most competitive price," he said. "But the ease and speed of going online must be balanced with ensuring that people understand the terms, conditions and cover of the policies they are comparing".

Hayley Parsons, Chief Executive Officer of Gocompare.com welcomed the initiative. "Comparison sites have added a new level of transparency for the consumer and buying insurance online has never been easier," she said. "However, comparison sites are very much dependent on the information that the insurance company provides, so establishing industry standards that all insurers, brokers and comparison sites can adhere to when displaying product information can only be a good thing.”