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11/26/13 - UK FCA Launches Review of Insurance Price-Comparison Sites

The U.K. Financial Conduct Authority announced on Nov. 24 a thematic review of insurance price-comparison websites to “gain a clearer understanding of whether the way information is presented gets consumers the fairest deal.”

The FCA’s review will include 14 websites that represent 90% of the market, as well as several providers of motor, travel, and home insurance products. The FCA said roughly 40% of all Internet users in the U.K. have used price-comparison websites to purchase motor insurance, and 25% have purchased home insurance through them. The review will consider whether the focus on the price of the policy has resulted in consumers purchasing products that do not meet their needs.

The FCA said it would examine exactly what people want from comparison sites when they are shopping for insurance, how they use them, and how they might be improved. The review will look at the business model of the sites, how they make profit, and how they deal with potential conflicts of interest — for instance, when the recommended insurer on a website also owns the website. The FCA also said it would look at whether the websites are using consumer data appropriately.

“Price-comparison sites are a driving force in the U.K. retail insurance markets,” said Stuart King, a managing director at Promontory in London. “It is clear that the FCA have some reservations about them.”

“This is only the latest in a series of insurance reviews. A key issue is how various regulatory efforts by the FCA and the Competition Commission will shape the market in the future. There is a risk of unintended consequences if they are not well coordinated.”

Additional Information:

Please contact Stuart King (+44 207 997 3402) for further information on Promontory’s view of these developments.