Insurance Age - Online trading tactics spark regulation debate

Insurance Age - Online trading tactics spark regulation debate: "Online trading tactics spark regulation debate
Sarah Hills
Industry concerns over the credibility of online insurance regulation have sparked a possible review of the onlineOnline trading tactics spark regulation debate

Sarah Hills



Industry concerns over the credibility of online insurance regulation have sparked a possible review of the online trading sector by the government.

Ed Balls, economic secretary to the Treasury, admitted that he was concerned about the regulation of retail insurance and questioned whether online sales, and in particular the compliance issues that arise from them, are being overlooked.

Gareth Jones, general manager, speciality division, at Allianz Cornhill, pointed out that although regulatory wording was available online, it was easy for customers to simply scroll through the information without reading it.

Mr Jones said: "If a consumer buys a policy over the phone, the adviser has a regulatory responsibility to explain the policy details. However, if a consumer has clicked online to say that they accept the terms and conditions, then that is a legal agreement.

"With an increasing number of people buying online rather than over the phone, this presents a regulatory dilemma - consumers are not reading all the policy details and insurers can do little about it."

Financial Services Authority (FSA) regulation dictates that customers should have the terms and conditions and key documents available to them before they buy an insurance policy, and commentators in the online market believe this is being upheld.

Adrian Web, head of corporate communications at Esure, insisted that there was already enough regulation in place: "Due to the large number of consumers who buy online, there has to be strong regulation and compliance in place. There is quite a bit of scaremongering going on in the market but FSA regulation makes it much harder to get consumers in the position to buy non-compliant policies."

However, Daniel Norris, director at Gothic Insurance Brokers, said that often online traders were not upfront and hid excesses from customers in the small print.

Mr Norris explained: "Customers are often adversely affected and brokers loose out because online traders are not playing on a level playing field. Online traders should be made to list a policy's total excesses alongside the premium, with a breakdown of voluntary and compulsory excesses."

In some cases, websites do not offer like-for-like comparisons on price versus cover. Instead, they offer a 'quick quote', which can result in customers being given a misleading price.

Peter Ballard, managing partner at Foolproof Business Services, commented: "If providers know that there are common issues that keep catching people out, then they should make more of an effort to flag this up somewhere other than in the small print."

Jon Kirk, director of e-commerce at Swinton, agreed, and stated that the onus was on the industry to make an effort: "You can really only try to make customers aware of the important information and main features of their cover before they buy."

Mr Kirk added: "Policy wordings can be made more palatable for customers to read, but this would require those in the industry to work together on simplifying the information supplied."