Regulator review considers benefits in addition to price
An interesting element in the Financial Services Authority’s (FSA’s) review of general insurance comparison websites is the regulator’s stance that sites should advise consumers to consider product features in addition to price.
With general insurance itself being a highly commoditised industry, and comparison sites earning their bread and butter with price-based comparisons, it might at first glance seem the regulator is a little out of touch.
But within the insurance industry as a whole, there is no arguing that features are gaining importance. Take, for example, a recent UK-wide poll by GfK NOP, which found that 19% of respondents would choose a home insurance provider based on features alone, compared with 14% in 2002.
A further 16% said they would base the decision on price and features, versus 11% in 2002.
Consumers are getting savvier. And with the price war raging on, it is unlikely that the difference of a pound or two will be enough to lure a customer away from a product with better features.
On the subject of price versus features, the FSA said: “Providing the ability to compare products is at the heart of what insurance comparison products are trying to achieve. However, our review highlights that sites are achieving this with varying levels of success.”
But while the FSA believes that price should not be used as the only comparison factor, it said it does accept that price comparison is a key feature that aggregators use to stand out from their competitors. Therefore, the FSA said aggregators do not have to compare features. But they must warn consumers to take product features into account.
