This means that consumers who find themselves without their car because of a problem with their vehicle will not be given a replacement car with 49 per cent of the insurance policies currently available.

Furthermore, 28 per cent of policies that do offer a courtesy car only do so as an additional cost option at the time when the policy is first taken out.

This goes against the priorities flagged by those surveyed particularly those in the 33 to 44 year old age group and those with children in general who desire the inclusion of a courtesy car.

Swinton released new figures revealing  a 23.4% increase in the number of car insurance enquiries from customers with drink driving convictions in June 2008 compared to those reported in June 2009 (coinciding with the Euro 2008), a percentage which is expected to rise sharply in summer 2010 with the World Cup.

Steve Chelton, insurer development manager for Swinton Insurance, said:”Many people are indulging in social drinking during the day and some don’t realise that they could be over the limit the following morning.”

“Motorists who are caught drink driving may be faced with a fine, a disqualification from driving or even a prison sentence, as well as a sharp increase in their car insurance premiums.”

Motor Insurers’ Bureau and Aviva describe fronting as the act of parents insuring their child’s car in their own name to significantly lower the cost. The organisations are quick to emphasise that it is actually illegal to do this.

Ashton West of MIB stated: “There is a lot of confusion amongst drivers about the importance of giving accurate information about the main driver to an insurer.” With as many as 70% of those polled unaware of the problems associated with fronting this appears to be true.

Stark Wayne contributes content to the comparechecker blog. He is particularly interested in ecommerce and its application in the insurance sector. See other posts by him on the blog at comparechecker.com

From 4 January next year people will pay 6% tax (currently 5% included in overall price). The increase translates to an average £18 a year in tax on a typical £300 car insurnace premium.

Young drivers who pay much higher premiums will be hit hardest. This comes at a time when drivers have already been hit by hikes in the price of their premiums –as much as 20 percent in the last 12 months.

Eric Galbraith, chief executive of the  BIBA commented “Biba’s research last year demonstrated that businesses and consumers were reducing insurance cover as a result of the recession, and we are concerned that increases to insurance premiums as a result of IPT could lead to even further underinsurance or even a lack of insurance protection. The last thing people need in a financial crisis is a higher insurance bill,” he said.

History of IPT

Introduced in 1994 at a flat rate of 2.5%.

It was increased on general insurance products to 4% in 1997

Increased to 5% two years later.

Increased by Conservative-Liberal democrat government to 6%

CompareChecker views the increase in IPT along with the increase in premiums made by insurers, admittedly to cover underwriting losses, to be yet more incentive for consumers to compare car insurance on the major comparison sites to get the best cover at the best price for them.

 Flex Luthor is a graduate turned entrepreneur known for his involvement in the widely opposed attempt to launch the first price checker for comparison sites, comparechecker.com

Although it must be noted that they are the most responsible when it comes to using hand-held devices when driving (12 % compared with 33% of 18-34 year olds –the worst offenders)

The insurer, Saga,  feels that in this age bracket 31% of drivers are finding hands-free aids a distraction. This brings cause for concerned when paired with the findings released by Saga that 32% of over-50s use sat nav systems and a further 20% use cruise control systems whilst driving.
 In addition Andrew Goodsell, of Saga, commented: “Installing high-tech gadgets, or leaving personal possessions such as mobiles and laptops in the car is an attraction to thieves, so we are urging people to make sure they keep high value items out of sight and to check they have adequate insurance cover,”  so there is a great need for car insurance.

Stark Wayne contributes content to the comparechecker blog. He was notably outspoken as a lobbyist for the launch of the widely opposed price checker for comparison sites, comparechecker.com

Mike Powell of Defaqto comments: “Replacing the locks of the vehicle if the keys were lost or stolen is seen as one of the most important cover elements for women, but for men, the survey highlighted that this cover feature was far less significant.

It appears that the feature is of more complexity than men, who generally give it far less significance, consider it to be with Mr. Powell breaking it down further

“Where cover is given, most policies will pay for the costs of replacing the locks, subject to any policy limit. Other policies also include cover for the costs of replacing the vehicles lock transmitter and central locking interface, and the affected parts of the alarm and/or immobiliser.”

Mr Powell echoed the sentiments of other advisors in his conclusion that drivers needed to review the wording in their policies as cover was usually  “subject to the policyholder being able to establish that the identity or garaging address of their car is known to any person who is in possession of the ignition keys.”

Source: Defaqto

Flex Luthor is a graduate turned entrepreneur known for his involvement in the widely opposed attempt to launch the first price checker for comparison sites, comparechecker.com

Directline, Aviva and other direct insurers are trying to make a comeback by refusing to allow their prices to appear on comparison site listings. Others such as AXA promise discounts to consumers who “come direct”. Can they really offer better prices by cutting out the “middle man”?

Comparison sites

Moneysupermarket claims to offer savings of up to £329, Gocompare up to £212 and similar amazing figures are thrown around by the crop of superaggregators (the most prominent sites, with the most traffic and marketing spends). Remaining shortcomings include a lack of absolute market coverage and material differences in prices between the major sites for the same insurers.

Direct insurers

Axa car insurance

Axa Car Insurance recently made a return to direct car insurance claiming to offer  drivers up to 90% no claims discount, the highest level available in the market by far. Conditions required to gain this mammoth discount include 8 years or more no claims discount. The insurer reckons there are nine million drivers that meet this criteria, and is spending £10m on getting back into direct motor insurance.

 So what does this mean for comparison sites and shopping around in general?

Direct insurers are offering discounts to direct buyers on top of any no related claims discount (AXA offering £30 off). AXA claims “We have to pay comparison sites commission, and this is to cover that cost. We want to encourage customers to come to us direct.”

In reality such discounts are almost meaningless as it depends on the price you start with, and in reality only the net price is relevant .

 Ian Crowder at the AA said: “Insurers are realising that customers who come via comparison sites are less likely to be loyal so there is little incentive to offer reduced rates.”

Translation: Offer a small discount now. Charge more in the long run by promoting apathy that is fleeting in this market dominated by the superaggregators

From the consumer’s perspective there is only a saving to be made if they are willing to search all of the insurers on the panel of the comparison sites manually. Find the cheapest in that respect and go direct. It will never be an argument that going direct is cheaper If you then decide on a brand in isolation. A £30 discount is false economy if the price is more expensive than non-discounted prices.

It raises a question on the part of the insurer. IF they aren’t paying commission to the comparison site who are they paying it to (TV channels, marketing companies etc.) and at what rate. Just by going direct does not save the insurer money. They have to market their product like any other in a competitive market place. Customer acquisition is not free.  

Conclusion

The insurers cannot deny the truth in the comments made by Lee Griffin of insurance comparison website Gocompare.com “It is often possible to get very similar cover for a much lower rate simply because each insurer will have a very different view of you as a risk and some insurers will not have increased their rates as much as others.”

According to the AA index average prices are still lower on comparison sites, at £698 against £986 if you go direct.

They are undoubtedly a less useful insurance pricing system in a market dominated by superaggregators offering a hundred plus prices.

It remains that the consumer still needs a transparent system to access all varieties of pricing information for their car insurance and other personal finance products. The market has been waiting a long time for it and this attempted regression toward a less transparent market of walled gardens (something true of comparison sites offering different prices and direct insurers keeping themselves out of the comparison site results altogether.) is evidence that It is long overdue.

Regulations, innovations and the pursuit of the best car insurance search experience
Mintel Aggregators report 2009 identified the groups of users interested in searching for personal finance products on comparison sites.

Comparison site user market segments

The segments targeted by marketers:

Aggregator enthusiasts 22% of internet users, Concerns: Negative media headlines, security of information, inaccurate quotes

Looking for: Time saving, easy application, and easy comparisons, real money savings

Price driven aggregator supporters: 35% of internet users, not interested in further research (e.g. having to fill out lots of forms) Looking for: appreciates time saving, price conscious, least concerned with data security and inaccurate quotes etc.

Anxious about aggregators: 16% of internet users Concerns: Inaccurate quotes and uses made of their personal information. Looking for: Well known brands, research tool, more likely to then go direct. 

Addressing their concerns:

1) New site design guidelines “Ensuring positive customer experiences of buying insurance online -A good practice guide” FSA/ABI

The review conducted by Financial Services Authority (FSA) in May 2008 concluded that many insurance comparison websites failed to give customers the information they needed to make informed decisions. Six months later although standards had improved the FSA still had concerns about aggregators’ use of assumptions during the quotation process.

The review found that such assumptions were not always obvious to the user or easy to find or correct.

The regulator showed concern over the transparency surrounding the quoted excess with respect to what was compulsory and how much voluntary.

The ABI’s good practice guide is the result of discussions with the British Insurance Brokers Association, leading comparison websites, the consumer group Which? and other stakeholders.

The guidelines should ensure the accuracy of the quotes returned in response to the data entered by the user, but in reality will do nothing to save the user time, money or safeguard their information (conflict of interest where the sites profit from making it harder to opt out of third party marketing etc.).

The rejection of a voluntary code of conduct in the form of the Comparison Consortium accreditation by all of the main players in the Comparison industry leaves consumers without any easy way of discerning the quality of these sites. Will it fall to a  third party to bring transparency to this sometimes murky but necessary sector?

Innovation is the biggest advantage in the price comparison sector (innovation and huge marketing budgets!). A little innovation is plugged with tens of millions of pounds in the next marketing campaign.

A major innovation is a “game changer”. Find that and you can dominate your industry. It appears that the price comparison industry is seriously lacking in real innovation – a meerkat is the biggest product innovation since the launch of such sites a decade ago.

New brand message: Ease of Use

Of the “big 5” price comparison sites the emphasis in general appears to be a shift from the “yay big savings” and “best prices” (that they cannot claim to supply every time or an ability to beat their competitors) to “Easy to Use”

Moneysupermarket.com (‘a great deal easier’), Comparethemarket.com (‘the simpler way to cheaper deals’ and ‘Simples’- subliminally implies it is easy) and Confused.com (‘the choice is clear’), Go Compare (‘Gio Compario’ ‘When costs are soaring… Thank your lucky stars you went to Gocompare’) –Evidently Gocompare did not receive the Ease of Use Memo!

Ease of use is not an innovation.

These money supermarkets are simple in their application. You fill in a form and results are returned. You can improve the information returned and simplify the way we enter our details but that is it. These are not “game changers”. Competitors can easily implement the same improvements and immediately the advantage is lost.

CompareChecker’s view

It is the widely held belief that aggregator numbers will soon consolidate (http://www.business7.co.uk/business-news/latest-business-news/2009/11/06/aggregator-numbers-will-shrink-soon-97298-21801384/) and that there will only be a credible new entrant if from a player with a large marketing spend or truly innovative offering.

2010 is the year of customer loyalty plans for comparison sites. Brand awareness from Meerkats, opera singers etc will not achieve this goal of consumer ownershup especially when we consider that 80% of comparison site adopters are using more than one price comparison site on personal finance product searches.

Real innovation, solving real problems will always create the Google, in a market of Yahoos.

A few figures from a new Which? Money report

• 1 in 4 find better value financial products elsewhere. With 12% stating they were unhappy with the quotes delivered for them.
• More than half went direct to purchase the product after using the comparison site.
• Only 3 out of 10 trust comparison sites.
• Two thirds believe results are listed based on the commission they make the comparison sites.
• No comparison site scored higher than 50% in customer satisfaction.

James Daley, editor of Which? Money, said: “If you’re shopping around for a good deal, it makes sense to go to more than one site and be aware that some companies aren’t featured. Watch out for things like voluntary excess and make sure the policy you’re offered is what you actually want.”

Which? Money questioned 2,510 members of the Which? online panel during August and September.

The most popular comparison sites in the survey were moneysupermarket.com, Confused.com and Gocompare.com, with car insurance, home insurance and savings accounts proving the most popular searches through the sites.

CompareChecker Viewpoint

Objectivity

Firstly I have to echo the sentiments of Hayley Parsons (Gocompare.com chief exec). The survey limited to Which? Online panel has to be taken in context.

I don’t personally think they are representative of the general consumer sphere. In general with these things the people with negative feelings speak out the most and most often.

Recovery in the performance of comparison sites

The recently reported recovery in Moneysupermarket’s business performance (strong third quarter) provides some indication that the comparison site big players are attracting users and converting to sales to make their commissions.

If the users are using the sites and then going direct to complete the purchase for less comparison sites either need to address the insurers who are undercutting the quotes they provide them with or conduct some sensitivity analysis of the difference between their quote acquisition methods and that of the consumers who go direct to eliminate this price differential.

Martin Lewis

Consumer champion, money saving expert. Whatever you want to call him. His site is very impressive but surely he is doing these comparison sites no favours.

The “advice” he gives to his visitors for car insurance could be paraphrased as Compare quotes on  approximately 8 comparison sites, then check the sites not covered on the comparison sites (e.g. Direct Line), then check the best deals direct and finally purchase via a cashback site.

It is true the results can be worth the extensive effort that such tactics would entail; however, in light of the fact that Moneysavingexpert.com receives far more visitors than any of the comparison sites (far more even than Moneysupermarket.com), you have to question their wisdom in offering him commission for traffic that is far from committed to actually making a purchase through their sites.