5 March 2015
Time for insurers to come clean on renewal
The public seem to have something of a love hate relationship with price comparison websites. While they love the ability to compare lots of brands and prices in one place, there's often a suspicion that the middle man is taking too much of a slice for themselves somewhere along the way. Which? periodically carries out customer satisfaction surveys into comparison sites - and astonishingly, the best performers rarely get any more than 50% ratings. To put that in context - most people trust their bank more than they do comparison sites.
The public are right to be on their guard. Comparison sites don't have a great record on transparency. In many cases, top brands don't appear on comparison sites simply because they don't offer any commission. And of those brands that are on the sites, it's not clear who's paying what - and it's not easy to be sure that the results are presented in a way that is best for the consumer, rather than best for the comparison site's bottom line.
Using their muscle
Moneysupermarket was the first of the big four comparison sites to wake up to this problem. And by and large, it's now better than most of its competitors in the transparency and fairness stakes. In the banking space, it does display brands for whom it doesn't get a commission. And last week, it became the first comparison site to start actively lobbying for changes in the insurance industry - using its muscle as a major distributor to put pressure on companies to give their customers a better deal.
In a new report, the group calls for reforms to the way customers are dealt with when it comes to renewal. Principally, it calls for insurers to allow customers to actively opt in, or opt out of automatic renewal - a choice that most insurers don't offer at the moment. Once you've bought your home or car insurance, you're normally automatically signed up to your policy being renewed in 12 months whether you like it or not - starting the cycle that leads to millions of people getting a poor deal in years two, three and beyond.
Moneysupermarket is also calling for last year's prices to be printed clearly on renewal letters - so that customers can see how much their premium has increased by. That's a cause that Which? has been campaigning on as well - and the industry has made some loose commitments to move in that direction over the next couple of years. But it's essential that it happens as soon as possible. If people could see that their premium was being put up 25%, it would give them a clear incentive to shop around. But many people can't remember what they paid last year, and assume that their renewal quote will simply be a few pounds more than the previous year. This generally isn't the case.
The Moneysupermarket report also makes some important asks around ensuring that policies can't be auto-renewed if there is any change to the policy terms - and calls for companies to go further to warn people that they need to alert their insurer if there's been a change in their circumstances. The auto-renewal process allows the customer to be inert - and so it's easy for them to forget to notify the insurer about important changes to their circumstances, which could invalidate their policy if they're not declared.
Why we're backing the campaign
Fairer Finance was asked to endorse the report - and we've been happy to do so. One ask that we're particularly in support of is the call to ensure that renewal notices are in plain English. It would be great to see Moneysupermarket putting pressure on companies to put their entire policy documents in plain English as well.
Clearly, this is not purely an altruistic move by Moneysupermarket. It's all good publicity, and is a platform that they're using to surface their brand in Westminster circles. But it's a rare moment where corporate interests and consumer interests are aligned - and it would be great to see other comparison sites using their power in the same way.
Insurance companies now rely on comparison sites for distribution, and that gives the sites an opportunity to dictate the terms. The next step would be for Moneysupermarket to threaten brands with removal from their platform if they don't comply - a step that I imagine they won't be willing to take.
Nevertheless, this is an important first move - and their report is brave enough to name and shame brands such as Admiral and Axa. For our part, we'll be urging them to go further still - and ensure that this is a consumer campaign that yields some tangible results.