As the general insurance comparison website industry has expanded in recent years, the FSA has carried out a fresh review into general insurance comparison websites (the review). This fresh review comes in light of a study, commissioned by the British Insurance Brokers’ Association (BIBA), which showed potential for serious consumer detriment across insurance comparison websites. (See: UK: Regulatory: Price Comparison Websites – an Unfair Comparison?) As a result of the study, BIBA urged the FSA to develop more appropriate regulations, to ensure that consumers are being afforded suitable protections.

This review follows earlier assessments in 2006 and 2007 when the FSA concluded that no immediate action, other than to follow the development of the market, was required. The review also relates to the Treating Customers Fairly initiative and the FSA’s recent paper on encouraging transparency in commercial insurance markets. (See previous blogs: Treating Customers Fairly in Wholesale Markets and Could Mandatory Disclosure of Broker Commissions be on the Cards?)

The review focused on 17 insurance comparison websites in which the FSA took the “customer journey” through the website, testing a number of elements in the chain of purchasing insurance. In particular the FSA focused on whether:

1. the websites reviewed had appropriate authorisation to undertake the activities they are performing; and

2. the information provided to consumers was clear, fair and not misleading, including whether the information provided was accurate when compared to the information available on the brokers’ and insurers’ websites.

Of the 17 insurance comparison websites reviewed, the FSA found that they were all appropriately authorised by the FSA despite concerns raised in BIBA’s earlier study. The level of permissions for these firms varied from Introducer Appointed Representatives, through to firms which were fully authorised for insurance mediation.

However, the review highlighted issues surrounding  the clarity, fairness and accuracy of the information given to customers. The FSA particularly expressed concern that the sites encouraged consumers to focus too much on price and not enough on the different features of policies. The FSA wants sites to warn consumers that the policies have different features and that these should be taken into account. In addition, the FSA wants comparison websites to be consistent in the level of detail they give on different policies and to have systems in place to ensure that the information they provide is correct and updated when necessary.

The FSA is now calling for all insurance comparison websites to provide consumers with information that is not misleading. Click here to read the review.

The review makes clear that the FSA expects all comparison sites to review their websites and make the necessary changes to ensure that they are clear, fair and not misleading. It added that it would be following up this review with a series of visits to firms.

The FSA has also drafted a set of consumer messages which identify the key factors consumers should consider when using general insurance comparison websites. (See: Insurance: getting help and Buying insurance for your needs.)

BIBA has since responded to the FSA’s review of the comparison websites. (See: BIBA Press Release- 8 May 2008)  In BIBA’s press release they appear to welcome the review and hope that those operating the comparison sites will now take action and that the poor practices, such as out of date information on websites, lack of information on excesses to be paid and inaccuracies, highlighted by the review are stamped out.