Pecuniary advantage by deception?

[gloomygoblin]

Anyone noticed the very large differences in prices related to motor insurance between those provided online through one of the comparison sites, and those obtained directly from a broker over the phone?

 

Last week I had an email from Go Compare regarding insurance, and they returned 43 prices ranging from £224 to £1200. As current insurance was through BISL (Budget, Dial Direct etc etc), and bearing in mind its sometimes difficult to get present brokers to disclose NCD details, I decided to continue using BISL.

 

BISL price was £267 through their Dial Direct trading style, and having found the prices differed greatly between online and over the phone, I called the number provided for Dial Direct, and was quoted £434 for exactly the same cover whose online price was £267!

 

When I queried this with the BISL phone drone I was forced to listen to what seemed like a mish mash of obvious lies and prevarication. The conversation was becoming extremely tedious so I terminated the call, immediately called back and was then quoted the price I had obtained online.

 

Strangely enough the FCA is quite comfortable with practices such as this, even though it is clear that anyone without net access may well be required to pay far more for insurance products, than anyone who can access the net.

 

I wonder are these practices common across the whole of the insurance sector, or are they only things employed by concerns such as BISL?

[unclebulgaria67]

Having worked for another company who runs in a similar fashion, here is what happens. The Insurers have many different rate sets and it depends on how you come to them. If you do a quote on the internet you will be a given a price, which you should be able to also obtain if you have to call the Insurers. But the quote must be pulled through from the comparison site onto the Insurers site for you to be able to do this. The Insurers are in a daily battle to place themselves as high up as they wish to be on the comparison site and therefore the quotes can be cheaper.

 

If you phone Insurers without having access to internet comparison sites, it is possible you could end up paying more. But this is not always the case. Because the comparison sites earn a commision and they are not always that good at dealing with some risks, it can be cheaper to obtain Insurance directly with Insurers or a brokers. On a TV consumer programme a few years ago, they found it was actually cheaper to arrange cover for a young driver through a high street brokers.

 

I must admit, I have always thought that Insurers having different rate sets for the same risk, but different because of the channel the business has come from, as being bad practice. But this has been the case for over 10 years across most Insurers. It is not in breach of any consumer trading laws, but I know that the OFT were looking into the way Insurance markets work for consumers.

[gloomygoblin]

In my case I experienced exactly the same thing when dealing with BISL last year, so would guess its a practice which is employed by them at all times?

 

Effectively it seems to me little more than fraud, as I would guess the price charged to a broker for a specific risk is likely to be the same, notwithstanding where the customer has obtained the quote. If a broker charges a far higher price, then the difference is directly related to a greater profit for them.

 

To be honest though I thought that BISL was a broker not an insurer as you advise, and obviously if they are actually underwriting risks themselves, then I would suppose they are able to charge exactly what they want?

 

However if they are a broker, then it seems a bit like Tesco charging £2 for a pack of horseburgers online, and £5 instore for exactly the same product? Is that wholly acceptable?...............I rather think not perhaps!

[renegadeimp]

Except with that example it would be fine as its just a discount for purchasing via a different method

[unclebulgaria67]

In my case I experienced exactly the same thing when dealing with BISL last year, so would guess its a practice which is employed by them at all times?

 

Effectively it seems to me little more than fraud, as I would guess the price charged to a broker for a specific risk is likely to be the same, notwithstanding where the customer has obtained the quote. If a broker charges a far higher price, then the difference is directly related to a greater profit for them.

 

To be honest though I thought that BISL was a broker not an insurer as you advise, and obviously if they are actually underwriting risks themselves, then I would suppose they are able to charge exactly what they want?

 

However if they are a broker, then it seems a bit like Tesco charging £2 for a pack of horseburgers online, and £5 instore for exactly the same product? Is that wholly acceptable?...............I rather think not perhaps!

 

They are an intermediary. They buy Insurance rates wholesale and will add on their amounts to give a final rate that is charged to consumers. Many large intermediaries/brokers do this.

 

To go by your supermarket example, I would add this. If I went to a Tesco Superstore in Wales ( where food is apparently cheaper) I may be charged 30 pence for a tin of baked beans. But if went instead to a Tesco Metro in central London, I may be charged 80 pence for the same tin of beans. You could argue as to why the people in London have to pay an extra 50 pence for the same tin of beans.

 

Insurance via a comparison site would be cheaper for the Insurance company, as there is no call being handled by an expensive call centre. If you have to phone the call centre to arrange the policy, they would incur more costs and therefore they would argue that they should charge more. In the example of Tescos tin of beans, Tesco would no doubt say it costs them more to serve customers in London, than it does in Wales.