James Daley

By James Daley

Insurance companies have had a love hate relationship with comparison sites, ever since they came to prominence sometime in the last couple of decades. What's been great for consumers, and sometimes exasperating for insurers, is that they keep a continued downward pressure on price. If an insurer can't get its quote somewhere near the top of your list, then they've got no hope of picking up your business.

On the upside for the insurers, however, comparison sites provide a simple gateway to millions of customers - allowing brands who can offer the right price to pick up large swathes of customers.

So far, so balanced.

I'm not a number, I'm a free man

But one of the inevitable consequences of the commoditisation of insurance is that insurers are increasingly distant from their customers. As you fill in the comparison site questionnaire, you're filtered into a box from which an insurer can make an intelligent guess about the level of risk that you represent. Postcode, type of car, age, number of years of no claims, job - with each answer you help the insurer get closer to understanding you. But in reality, they don't - they're just putting you in the box that best matches your profile given the answers you've provided. And in most cases, the reality is much more complicated.

While it's absolutely vital that you never lie when you're applying for insurance, there are often many right answers to some of the questions that insurers will put to you. If you're savvy, you'll make sure that you experiment with your responses until you find yourself in the box that gives you the cheapest premium. And you may find that the answers that get you there are not the most intuitive.

Since I started Fairer Finance, I've spent a lot of time on comparison sites - often helping people get a cheaper deal on their insurance. It's astonishing how changes to the way you describe your job can wipe hundreds off your premium. Equally, changing the number of miles you say you do in a year, or opting for a slightly different excess can all make a big difference to how much you pay.

Recently, I watched someone shave around 25% off their premium by describing their job in a different way, and by taking the time to make a more accurate estimate of the miles that they do in a year. And when I'm doing my own car insurance quotes, I've found over a dozen different ways of describing what I do - all of which are as right as the others, with each one converting into a different price on the final screen.

Sneaky or savvy?

Some people feel this is sneaky - and that perhaps you should only get one shot to answer the comparison site's questions, with any changes after that edging you towards a lie. I couldn't disagree more. As long as you can make a reasonable case that the facts you are presenting are correct, then you should have every right to experiment with the different options. And I'm confident the Financial Ombudsman Service would take your side if the insurer ever decided to test it out.

In an ideal world, insurers would offer a more personalised service. They would get to know you - and the risk you present - rather than putting you into a box and treating you the same as everyone else in it. There are young motorists who drive responsibly, and elder ones who drive recklessly - but in the world of mass market insurance, there's no way to recognise these exceptions when you're taking on a new customer.

It's cheaper to pigeon hole you - but the rub for the customer is that there's often little transparency around how your answers may effect your premiums.

The one that still really grabs me is the difference in price between declaring yourself unemployed vs a stay at home spouse. For younger drivers, the difference can run to thousands of pounds. If you're looking after children at home but casually looking for work - I'd say that you could honestly claim to be either unemployed or a "house person" as the comparison sites like to call it. No one would select unemployed if they knew it could add hundreds or thousands to the price they received. But no insurer volunteers the fact.

In the world of life insurance, you're either a smoker or you're not. But there's a big difference in health outcomes between a 60 a day smoker, and the person who has a few a year. Online, it's a yes or no answer - with everyone who smokes lumped into the 60 a day camp, and priced accordingly. It's no wonder that some people lie when they're filling in their form - they feel like there isn't a box that characterises who they are.

As long as insurers try and casually pigeon hole us based on 20 odd questions, I think consumers have every right to stop and think about how they wish to be categorised. I'm still not sure that occupation is something that insurers should be allowed to ask about at all when it comes to car insurance - unless driving is an integral part of your job. But if that information can be used to add or deduct serious sums from your premium, then you'd be mad not to spend some time working out what the insurer wants to hear. Just be sure not to lie.