The FSA may well have the axe hanging over it’s head, be over-populated by a bunch of pen pushers and bureaucrats, culpable for the restriction in insurance products and markets available and be responsible for failing to avert the recession caused by the banks, but…….

Insurance Blog will be the first to admit that the FSA in it’s swansong is at least trying to do the right thing, with some notable recent successes in prosecutions and forcing the banks to heel over the mis-selling of payment protection insurance.

Those small insurance brokers, insurance agents, consultants and intermediaries whose rising FSA authorisation costs and annual fees have helped fund the Financial Services Compensation Scheme to pay for the banks mis-selling crimes would be the first to disagree, however their contempt for the organisation might be tempered some if they were aware of the FSA’s latest moves against their largest competitors……

The Insurance price comparison websites and aggregators selling general insurance products on the Internet.

If the FSA’s latest proposals for the regulated Selling of Insurance on the Internet are enforced, this could be a good thing for all small insurance intermediaries out there, who collectively currently receive less than 5% of the total internet traffic searching for Insurance.

First in the line of fire has been the Insurance price comparison websites, particularly those that compare car insurance and home insurance, and recommend insurance products to the public. In it’s investigation the FSA found serious breaches of it’s rules on the regulation of giving advice and selling of insurance. It subsequently wrote to 19 firms that it considers are breaking these rules in regards to advice and arranging contracts of insurance.

The letter advised the Price Comparison website:

· review your regulated activities and ensure you are appropriately authorised or otherwise exempt;

· ensure that you only enter into contracts with firms holding the appropriate authorisation and permissions to conduct that regulated activity (or who are exempt);

· withdraw your assistance from third parties if they are in breach of the general prohibition;

· review your disclosure documentation, sales procedures and your terms and conditions and make sure that these are compliant with all relevant regulatory requirements including our Guidance consultation Principles, ICOBS and the Unfair Terms in Consumer Contracts Regulations 1999. In particular, you should ensure they comply with  requirements on: customer eligibility, status disclosure, advice suitability, providing a proper statement of demands and needs, and that you do not seek in your terms and conditions to exclude liability for the regulated activities you are undertaking; and
establish, implement and maintain adequate policies and procedures to ensure your firm complies with all relevant obligations under the regulatory system and for countering the risk of furthering financial crime, in particular breaches of the general prohibition and restrictions on financial promotion.

A price comparison firm may be arranging contracts of insurance where its activities involve any of the following:

· the firm provides links to product companies or intermediaries for the purpose of enabling the customer to purchase a chosen insurance product;

· the firm requires a pre-purchasing questionnaire to be completed in order to filter sales (i.e. where the intermediary asks a series of questions and then suggests several specific products.

Under these guidelines it would appear that any website that collects information with the view to arranging insurance or even provides a link, is breaking the FSA rules if not authorised to do so….

The FSA found the folowing types of Insurance websites in breach where they are not FSA regulated:

· the firm provides a comparison of the terms of different policies as opposed to a passive display of the features of different policies;

· the firm runs a website which is funded by one or more insurance or mortgage providers (i.e. it is not ‘independent’); and/or
· the firm offers a special discount on the product to its website users.

. Even where no financial benefit is derived, the firm may still be making arrangements if it brands the comparison service with its own name, endorses the service or otherwise encourages users to respond to it, negotiates special rates for users, or holds out the service as something arranged for the benefit of users.

Advising on insurance
The FSA now considers any type of recommendation as giving advice. In addition where the effect of the firm’s arrangements constitutes a recommendation to purchase a specific product or products, that recommendation is likely to involve the firm giving regulated advice.

Some indicators of where a website or price comparison website may contain advice which is regulated by law include:

· where the name or logo of only one insurance product is displayed on the website in a manner that suggests that the particular product is to be preferred over other products (for example, a particular logo might appear on a webpage containing generic advice on the merits of incapacity insurance contracts);

· where a particular insurance product is recommended as the ‘pick of the best’ product out of a number of other products in its category;

· where a particular insurance product is star-rated by a website, for example, the product is awarded five out of five stars, by contrast to a similar product which is awarded two out of five stars;

· where a scripted questionnaire gives a recommendation or opinion which influences the choice of insurance product and then goes on to identify a particular insurance or regulated mortgage product to which the advice relates;

· where the questioning process has resulted in the identification of one or more particular contracts of insurance based on a non-objective assessment of the product features;

· where the website generally makes any value judgement as to the merits of one or more insurance products or regulated mortgage contracts, by way of scripted questioning or otherwise;

· where generic best buy tables are used and are not populated from specific consumer information this might be advice depending on the consumer’s experience of it. So, for example, a website containing solely generic ‘best buy’ tables explaining the merits of futures as opposed to options would not be advice, but if those tables guide the consumer to a particular insurance product based on the consumer’s personal requirements, this is likely to be regulated advice;

· where generic statements on a website are not dependent on consumer information being populated; this could be regulated advice where they are displayed in such a way that the website operator is making value judgements as to the merits of buying, selling, etc. For example, ‘The products of the month are XYZ, ABC and DEF investments because they offer the best returns’.

Clearly if implemented to the full the following types of insurance marketing would be illegal on the Internet in the UK for all websites that are not authorised and regulated and will have huge ramifications for the way insurance is distributed online in the future:

· Linking of any sort to Insurance Provider or Insurance Comparison website (Text links and Banner ads)
· Distributing Articles and Media that link to or promote insurance products (Article Directories, Video Directories, Social Media, Blogs)
· Affiliate Marketing and Vertical Marketing by non regulated affiliates
· Review Websites
· White Labelled Websites
· Marketing Websites

Insurance Blog thinks that this is a good thing, if it is properly policed as it will remove a lot of the chaff from the Internet, much eminating from unqualified webmasters both inside and outside of the UK.

Road Kill or RSPCA?

They are everywhere you turn….

There’s no escaping them!

They are certainly more indigenous to the UK than any other country to date and although everywhere are not really understood by humans, some who choose to ignore their presence totally.

They are widely cared for amongst the young and patient and they are a very eclectic bunch of ‘animals’.

You’ve got Tigers, Elephants, Rhinos, Dogs even Froggies and of course Meerkats to name but a few.

Yes of course we are talking about Car Insurance Comparison sites!

Car Insurance comparison sites are not a new concept, however the modern beast is a lot different from what was available in the high street thirty years ago.

People have always wanted to compare prices to get the best deal and the British car insurance buying public had and still do have a penchant for a deal and cheaper car insurance.

In those days the only option for the savvy buying car insurance punter was to visit a high street car insurance broker. Car Insurance Brokers in those days would be able to offer you a limited choice of policies depending upon how many agencies they had managed to acquire with underwriting agents or car insurance companies. Quite often the car insurance comparison was done manually by a clerk from a printed book of rates. There more advanced and bigger brokers would have had what were called car insurance rating front ends connected, sometimes, to  EDI systems that passed the business onto the Insurance company. This was the only way you could compare car insurance. The alternative would have been to visit a  tied agent who would only offer you one car insurance policy from the agency he was tied to. Surprisingly though, the agents were quite often cheaper than the crude car insurance comparison systems that existed, and funnily enough this still holds true today to some extent!

The first car insurance comparison websites were British and appeared on the Internet over twelve years ago. They were not the sleek sophisticated processes or services that a few now operate. Nor did they compare much because very few insurance companies or car insurance brokers had the capability to provide rating engines in real time. Consequently the so called aggregators of the time were initially limited in the range and scope of their insurance offerings and the high street broker with many agencies and new PC’s could probably compare more car insurance polices than the new  young comparison offerings of the time.

The actual technology itself behind the car insurance comparison site is basically the same now as it was twelve years ago, however the ubiquitous availability of Broadband and the rise of Generation E, have made the markets and technologies available to the whole UK public, and a worthwhile proposition for just about every investor and insurance company with nous.

One of the many complaints often heard voiced about car insurance comparison sites is the speed or response of the website and the length of the wait before the quotes that have been compared are returned.

This problem is partly as a result of the success of the car insurance comparison websites themselves, and their desire to offer more quotes compared to the the public, but also a result of the underlying technology used by them.

Since their early days large car insurance comparison websites have used what is known as screen scaper technology. This enabled them to collect all your car insurance details in one form on their websites, whilst in the background the server would be form filling the online application forms at the car insurance providing affiliates or underwriting insurance company website.

Before presenting the quotes back to the Internet User to ‘compare’, they have to ‘aggregate’ them into one webpage  – hence the long wait.

Many of the largest companies you see offering price comparisons online still use this method.

A much quicker method for serving up car insurance comparisons opn the Internet is integrate the rates for each policy  into a local database that could actually deliver real time comparisons in an instant.

However the big names still employ screen scraping in a bid to get as many offerings on the site as possible. So many car insurance price comparison websites have foregone speed to deliver volumes of quotes compared.

Not only is this delay frustrating for the user but the majority of quotes returned are outside the ‘buying parameter’ of the potential car insurance client!

Despite all these growing problems car insurance comparison sites are becoming more popular every year and will soon become the de facto method of enquiry about the costs of motor cover even if people still buy from a broker.

Car Insurance Blog sent Dave Healey along to talk to the folks at Car Insurance Comparison one of the UK’s newest and quickest car insurance comparison sites and part of the compare.com group, to find out just what is involved in an online car insurance comparison site and why do people use them?

Spokesperson Lee Andrews explained.

“Car insurance comparison sites team up with a range of different insurers allowing them to provide a large number of quotes, ordered by the lowest first. This allows the consumer to select the cheapest or quote that’s right for them.”

“It’s really easy to use!  Firstly, you will be asked to enter your details into the comparison site being asked various questions such as make, model and value of the car and your history as a driver. All these questions are fed into each insurers quotation engine and a quote is sent back to the comparison site, these are then presented to the user to select from.”

“This is a proven process and is almost guaranteed to save you money if you have never used a car insurance comparison site before and the higher your premium, the more you are likely to save with a car insurance comparison.”

“Most comparison websites will compare anything from 30 to over 100 insurers and chances are the more they compare, the more likely you are of saving money on your renewal price. The list of insurers to each site usually differs between one comparison site to the next so it might be a good idea to try 2 or 3 of the big ones in order to ensure that you are obtaining quotes from most of the market.”

“When selecting a policy, try to bear in mind that price is not everything, take into consideration the amount of excess, and additional cover such as breakdown or legal cover included in the price. Also be sure to check the interest rate if you are paying by instalments – they may have provided the lowest quote but you could end up paying more back after interest has been added.”

“Finally, be sure the company providing your cover is a reputable company, if the lowest quote is from a company you have never heard of, and the next quote in the list is a well known company it might be worth paying a little extra for peace of mind.”

So there you have it from the ‘horses mouth’! Remember to visit a few of the less well known car insurance comparison sites qwhen shopping around for those hidden bargains. There are many specialist car insurance comparison sites these days on the Internet, which allow the customer to compare classic car insurance to comparing quotes on the one hand and specialist kit cars on the othe ‘paw’.

Happy hunting!

Related posts from Car Insurance Blog:

1. New Car Insurance TV Advert Causes Controversy (9.039)
2. High Performance Car Insurance Comparison Website (8.258)
3. Moneysupermarket.com Car Insurance Review (8.208)
4. Getting the best Convicted Driver Insurance (7.652)
5. Refused Online Car Insurance? Computer says No! (7.298)From → Car Insurance Comparison Sites, Car Insurance Rating, Compare Car Insurance, Compare Car Insurance Quotes, Compare Classic Car Insurance, Compare The Market, Comparing Car Insurance, Confused.com, Cover Comparisons, Elephant car insurance, Go Compare, Moneysupermaket.com, Price Comparisons, Quotezone, Rates, aggregators, car insurance, car insurance online, car insurance quotes, car insurance rates, car insurance supermarket, compare performance car insurance, compare quotes, compare specialist Classic Car Insurance, quotes