94% of consumers believe policies listed on online comparison sites are "not explained fully"
The British Insurance Brokers’ Association (BIBA) is calling on the Financial Services Authority (FSA) to urgently review its Insurance Conduct of Business (ICOB) rules for electronic introductions, following the conclusion of independent research into price comparison websites.
The research has raised concerns that current FSA rules are not appropriate because they were finalised prior to the development of price comparison websites. BIBA chief executive, Eric Galbraith said that BIBA would be discussing the matter further with the FSA.
Some of the key findings of the research include:
· Over half of insurance buyers interviewed do not fully understand the differences between each insurance policy offered via comparison websites
· Only 6% of insurance comparison website users believe that the details of what the policy covers and does not cover are explained fully.
· 84% of insurance buyers said that the details of insurance policies offered via price comparison websites can be confusing
· 93% of consumers expect insurance comparison websites to be regulated in the same way as insurance intermediaries
The research, undertaken by FWD, also found that many price comparison sites use ‘assumptions’ as the base of their quotation which could lead to consumers purchasing a policy which is not appropriate for them. The report highlights that a third of insurance buyers are unaware that aggregators often make assumptions in order to compare quotes.
Galbraith said: "The current FSA rules were written prior to the growth in aggregator sites. I believe the regulator should now look again at developing more appropriate regulations to ensure that consumers are being afforded suitable protections.
"There are still too many people logging on, and making a decision solely based on the price of a policy, rather than the protections it offers them and potentially buying an inappropriate policy. Insurance products are complex, and it is important to understand the cover they provide. Brokers are professionally trained to help. Aggregators and technology are developing rapidly and consumers must be sold the right policy.
"BIBA will be discussing this with the FSA and I also welcome the opportunity to work with price comparison websites to find a suitable solution to this problem."