Price comparison insurance sites to come under investigation
February 1, 2008
According to a recent report price comparison sites that deal with insurance services are to come under scrutiny from the Financial Services Authority following concerns that were raised by the British Insurance Brokers’ Association. Price comparison sites have become increasingly popular over recent years, with more and more sites being launched and consumers able to compare the cost of a range of services and products through these sites.
The FSA now has to determine whether the way in which these sites operate can be mis-understood as giving advice. Price comparison sites are able to arrange insurance for a customer, but under regulations cannot offer advice on insurance products because they are not qualified to do this. Official from BIBA want the regulations that govern price comparison sites to be reviewed, as the current ones are outdated.
Data suggests that many consumers that use these sites to get their insurance are confused with regards to the expertise of the sites. Many thought that the sites were regulated in the same way as insurance broker firms are. Having taken policies through price comparison sites, a large proportion of consumers stated that there was not enough information about the insurance product,
Officials from BIBA stated that displaying insurance policies in price order, with the cheapest first, mis-leads some consumers, as many take out the cover based on price alone, not realising that it is actually not suitable for their needs. BIBA officials raised the complaint initially in 2005, but at that time the FSA decided not to investigate.
However, an FSA official said: ‘In the light of the evidence from Biba we think now is the right time to have another look.’
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