Tuesday, June 19, 2007

Direct line takes a swat at best buys | Insurance | Personal Finance | Money | Telegraph

Direct line takes a swat at best buys Insurance Personal Finance Money Telegraph: "Direct line takes a swat at best buys"

Last Updated: 12:01am BST 11/06/2007
The insurer has accused comparison websites of not being all they seem. But how fair is that assessment? Emma Simon reports
Direct Line, the insurer, has launched a stinging attack on online price comparison services, claiming that they are not accurate, independent or comprehensive.
In a new TV advertising campaign it warns consumers to be wary of these sites when searching for cheaper car or home insurance.
Not surprisingly this attack has drawn a sharp response from the likes of moneysupermarket.com, confused.com and gocompare.com - all of which are comparison websites.
Richard Mason, a director of moneysupermarket.com, says Direct Line's tactics smack of sour grapes. "Sites such as ours have changed the way people shop for insurance and as a result Direct Line has lost market share," he says, pointing out that websites such as moneysupermarket.com would be happy to include Direct Line's prices in their searches. "We have the technology to access a Direct Line quote for every consumer. But when we try to include them for comparative purposes we are threatened with legal action."
He adds: "Consumers can draw their own conclusions about why Direct Line refuses to participate with the various comparison sites. It may be that they don't want consumers to see how uncompetitive their prices really are."
Mason's words are echoed by Hayley Parsons, the founder of gocompare. She says she is "shocked" by Direct Line's latest advertising tactics.
"Our site rates insurance policies on more than just price," she says. "Direct Line claims to offer a range of additional benefits, but it does not offer a replacement courtesy car on its standard insurance policies, unlike many providers. Such an omission would be easily spotted if they appeared on our website."
Direct Line denies this is "sour grapes". Roger Rams-den, the strategy director of insurance at Royal Bank of Scotland, which owns Direct Line, says: "We simply wanted to reassert out position that Direct Line always cuts out the middleman. And these comparison sites are just that: they stand between the consumer and the insurer and there is a cost for this service, although it is not always transparent."
He adds: "By their very nature, these sites are focused primarily on price. As our ads make clear, we offer unique benefits which can't easily be conveyed in an online best-buy table."
So in the battle to find the best car insurance deal, what is the motorist to do: log on to moneysupermarket.com or ring a handful of direct -insurers?
The answer is probably both. Used intelligently, comparison sites and best-buy tables can help you find some of the best deals. But customers should be aware of that some may havelimitations. Remember to look at more than just the price: a cheap policy that doesn't provide adequate cover is not value for money.
Direct Line's attack may be motivated by self-interest, but it has helped identify what you can expect to get from a best buy table.
Price comparison sites may give the impression that they trawl the whole market to find you the best insurance quote, but this is not always the case.
The best websites certainly trawl most of the market, while some smaller sites may compare prices from a smaller panel of insurers.
Direct Line is not the only company not to appear on these websites. Churchill, Privilege and Tesco Personal Finance - all also owned by Royal Bank of Scotland - are also no-shows.
However, Tesco Personal Finance is understood to be launching its own comparison service this summer, and it is expected that this new service will include quotes from these other RBS brands, although not Direct Line.
Norwich Union Direct is another big name that does not appear on moneysupermarket.com (although it does appear on confused.com and gocompare.com). But moneysupermarket does list prices from RAC and Simple Cover, both brands owned by Norwich Union. The only other notable exception is CIS (Co-operative Insurance).
Most consumers will not be too troubled by the fact that a couple of insurers are not included in their search. But if you want a policy from one of these popular brands or feel they may offer a more suitable deal, make sure you contact them direct as well.
One size fits all?
Customers may have to re-enter their details on the chosen insurer's website before purchasing cover, and the final premium can be substantially higher than the price quoted in the best-buy table.
Many will be familiar with the best-buy tables that appear in the back of most national newspapers (including The Sunday Telegraph) and online. These cover simple products such as credit cards, loans and savings and list the most attractive rates currently available.
But buying car or home insurance is more complex because rates are tailored to the individual and based on a whole host of factors, from your age, occupation and address to the make and model of your car or the types of window lock fitted to your home.
In order to get a tailor-made quote the price comparison sites require users to complete a detailed questionnaire. Using this information they then trawl the insurers listed to find which provides the cheapest quote for the particular circumstances listed.
But this "one-size-fits-all" form may not tally with each insurer's own underwriting process, so the premium could change when you apply for cover.
Mason of moneysupermarket says: "We get the information directly from the insurers' own websites, so the quotations should always be accurate, provided customers do not change any details when completing the insurers' own form." Gocompare says it "guarantees" all the prices listed on its site.
Research conducted by Direct Line shows that more than a third of consumers (38 per cent) do not realise that these comparison sites receive commission payments from the insurers listed on the site. It found that some consumers thought the sites made money from selling advertising space, while others assumed they were offering a free information service.
There may be no such thing as a free lunch but it is also the case that there is no such thing as a free insurance quote. All of the main comparison sites receive fees or commission payments from companies listed.
This payment is usually made if a customer clicks through to the insurer's own website and buys a policy. Most comparison websites are reluctant to reveal the size of these payments but it is understood that they can be as high as £120 per click; although most are in the £30 to £50 range.
Eyebrows have been raised by some because these fees are not disclosed but Mason says it is upfront about the fact that it is a commercial organisation. "The fees we receive do not influence how we present information. If they did, consumers would not use us, and that would be far more detrimental to our busines," he says.
Direct Line also points out that many consumers do not realise that these sites can be funded by insurance companies: confused.com, for example, is owned by the insurer Admiral - although it is up for sale.
To fund the launch of gocompare, the founders took a commercial loan from Esure, although they have no shareholding in the company. Both companies deny this has any influence on how best buys are selected.