Insurance aggregation sites can be unfair, says regulator

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".