Insurance Times created three people – Jim, Molly and Carol – complete with individual profiles, and sought quotes from brokers and insurer websites for a range of policies. The results proved that the web is cheaper, but will they get good service?

Jim Brown is a journalist who likes to travel the world. In the past year, he’s been to India, Thailand and Australia without any problems. He wants a worldwide travel policy to cover him for the next 12 months, and had been thinking of going through a broker.

What has changed his mind is cost. After a little bit of digging, Jim finds he can buy online for around £50-£65 – half the price. After entering in his details, he’s got his cover and doesn’t look back.

Jim Brown isn’t unusual, according to the Insurance Times broker pricing survey. We created detailed profiles for three imaginary people – Jim, Molly King and Carol Fraser – and keyed their information into insurance companies’ websites. The same profiles were then run on broker quote systems.

All the quotes were like-for-like, matching the insurer’s website quote against the broker quote. Time and again, the broker quotes were significantly more expensive, especially in motor.

Take Mondeo driver Molly, for example. We made her a mother of two children, with no claims in the past ten years.

She was quoted £1,165 by AXA via a broker, but online that quote was just £491.35. Aviva quoted Molly £700 through the broker, but just £532 online.

The quotes included broker commission, but even taking that into account, the differences are still large. For the purposes of the survey, excesses were kept roughly the same.

So what’s going on?

Broker Network chairman Grant Ellis says that to understand the price differences, you have to look at the first direct-to-customer operations, such as General Accident. Back then, the money involved in starting a direct operation and paying new staff meant that the cost of acquiring a customer was cheaper via a broker.

But price differences emerged as insurance companies said they had to make up for poor customer retention through brokers. Insurers argued that brokers would remarket the policy on an annual basis, whereas a direct customer was more likely to remain with them.

Ellis says the situation has changed again, and he doesn’t agree with that argument any more. He says that, with the advent of the aggregators and the surge in insurance advertising, insurers are just as likely to lose online customers.

Ellis believes there is a view that brokers now cross-subsidise insurers’ direct operations, and this has led to the broking community wanting far narrower price differentials.

Referring to the Insurance Times survey, Ellis says he is disappointed that it shows up a significantly lower cost for customers going online. “I cannot buy the fact that insurers are running more efficient operations to the extent we are talking about here, and so it inevitably leads me to believe that they are cross-subsidising.”

Are insurers listening?

Biba chief executive Eric Galbraith says it is difficult to compare like with like considering all the nuances, but agrees that insurers need to do more to help brokers compete.

He says: “Some of the price differences are unbelievable. Insurers must recognise that their marketing creates little in the way of continuity or loyalty with their customers.

“The price focus is unhealthy for customers and the market. At the same time, multi-distribution insurers should recognise the value provided by brokers in getting the correct information and correct cover in place, and rate their policies accordingly.”

Aviva, which is making a big push in personal lines, says it has listened and is on the side of the broker. The proof will be in the pudding as the company rolls out Aviva Personal Best, which aims to eliminate the discrepancies.

Personal lines director Sam Hudson said: “All of our brokers already have access to Aviva Personal Best, which allows them to sell our direct product at direct prices and take advantage of any offers that are available.”

AXA stresses that it is difficult to compare like with like because of different broker commissions and pricing strategies. A spokesman says: “We believe we price competitively, tailoring our offering to different markets and customer segments. We provide optimum choice for our customers in the way they choose to purchase their product.”

Despite these efforts, insurers face a public relations battle in convincing brokers that they are on their side.

Count the difference

Manor Insurance director Ian Mantel reflects the stoical attitude of brokers. They have begrudgingly accepted that most insurers are never going to offer them deals on an equal footing, so consider it imperative to press home the advantage a customer gets through service.

In the past few weeks, for example, Mantel and his team have been giving hands-on help to travel insurance customers delayed or stranded after the flights chaos caused by ash from the Eyjafjallajökull volcano. It is this type of service that keeps customers coming back year after year, despite the rise in insurance company’s direct operations.

“Life is too short to focus on things you cannot change. It’s better you to focus on something that you can achieve through results,” Mantel says.

“I cannot say that some customers have been with me for 20 years for price. They are here because of loyalty and good service.”

Broker Richard Cox from Towbay says: “Everybody talks about price, but that is the wrong way to look at it. What is important is that the policy is sound in terms of the cover and what it is providing. My view is that it cannot be done without the involvement of a human who knows what they are doing.”

A Bluefin spokesman says that the firm advises wealthier clients on the personal lines business, and its broking services are, therefore, in demand. But, regarding our survey results, he adds: “It does illustrate that dual pricing is alive and well. It suggests, obviously, that insurers are promoting stripped-down products when the real differentiator is cost.”


Research analyst, 52 years old, married with children. Owns a detached house; drives a 2005 VW Golf


£299.17 AXA online, compared to £357.10 AXA Extra via broker (contents amount differs)

It was not possible to obtain directly comparable online and broker household quotes from the same insurer for Carol, a customer with a high net worth.

MoreTh>n was the only online provider of the four insurers we approached that was able to meet all of her requirements (she’s a tricky customer because her stone-built home was constructed in 1800 and she has a contents requirement of £75,000).  The MoreTh>n online quote of £513.93 was comparable to a broker quote from NIG at £565.36 before commission.

It was possible to obtain quotes from AXA with less of a price difference between broker and online, but the web price did not fully match her requirements: contents cover was only £60,000. AXA’s online prices were £299.17/£332.49 depending on whether the policy included accidental damage. These compared to a broker quote of £357.10, which included contents cover to £75,000.


Care manager, 40 years old, married with two children. Owns a terraced house; drives a 2004 Ford Mondeo


£426.99 More Th>n online, compared to £658 RSA* via broker

£491.35 AXA online, compared to £1,165 AXA via broker

Motor was one area where there were substantial differences between online and broker quotes. Molly King was offered £491.35 online by AXA direct but the broker’s AXA quote came in at £1,165. This was despite the fact that Molly has no claims or convictions in the past ten years, although she does occasionally use her car for travel. Aviva offered the best broker deal – £700 – which compared to £532 online. Aviva’s Personal Best would have lowered the broker price.

Molly’s situation compared favourably to the other profiles created by Insurance Times. 28-year-old Jim – no convictions but driving a powerful Skoda Octavia – was declined for a quote both online and by brokers. Perhaps this was a sign that insurers, which have been heavily hit by bodily injury claims last year, are clamping down on younger drivers with the potential for generating claims.

* More Th>n is a subsidiary of RSA


Journalist, 28 years old, no children. Owns a converted flat; drives a 2006 Skoda Octavia


£53.36 Aviva online, compared to £113 Aviva via broker

Jim didn’t have it easy in his search for a good broker deal for his worldwide travel insurance. Aviva offered him £53.36 online, which compared to £113 from Aviva via a broker. The cheapest broker policy came from Biba, with a quote of £81.92.

Jim missed out on some good deals from Tokio Marine. The other artificial profiles created by Insurance Times were offered quotes by Tokio Marine that were not far off the average price offered on the internet.

Most web prices were in the £60-£70 range for Jim. However, Aviva’s direct deal was the most competitive, at £53.36. IT