Drivers risk paying hundreds of pounds more than they need to for car insurance due to a number of quirks in how insurers and comparison websites collect data, a new investigation from Which? has revealed.
The snapshot investigation found that differences between questions asked by car insurance comparison sites and individual insurers – and the resulting assumptions about a driver’s circumstances made by the insurers – can substantially inflate premiums offered to drivers.
In one scenario tested by Which?, seemingly small variations led to a motorist being quoted more than £200 extra because an insurer wrongly assumed they had made a claim for damage to their vehicle.
When using a comparison site to purchase car insurance, drivers are asked a single set of questions agreed by the insurers on the panel rather than answering each insurer’s unique set of application questions. This can lead to insurers gathering slightly different information about drivers to base their prices on than they would using their own questions, with two insurers confirming this can lead to different prices being quoted for the same person.
Which? has previously highlighted instances of this when looking at dashcams, finding that while some insurers offer discounts of as much as 15 per cent for dashcam owners, only one of the four major comparison sites gave drivers the chance to specify whether they owned one or not.
Which? also found that while it is compulsory to declare all recent driving incidents, not all comparison sites let you specify which, if any, led to insurance claims, resulting in some insurers making incorrect assumptions.
When checking the questions sets of four major comparison sites, Which? found that Confused.com and MoneySuperMarket did not let drivers specify whether they had claimed on a reported incident.
Which? tested a scenario using both sites, where a south London-based driver had recently damaged his car, but had not claimed for the repairs. When checking the assumptions made by the insurers offering the 10 cheapest quotes using these two comparison websites, two insurers – Hastings Direct and Churchill – wrongly guessed the driver had made a claim, and factored this into the premiums they quoted.
When corrected, Hastings Direct lowered its quoted price by £10, but Churchill lowered the premium by £207 – more than a quarter of the initial quote.
Which? also found that seemingly irrelevant customer information collected by insurers, such as home-ownership, marriage status, or job title, can have an influence on premiums if insurers find a correlation between these factors and making a claim based on existing customers’ data.
Which? ran a separate set of quotes for the south London-based driver, and found that quotes were around four per cent cheaper if they were a homeowner, and four per cent more expensive if they were divorced than if they were married.
The way drivers describe their job title can influence premiums, too. When the driver in Which?’s scenario described himself as a painter (working in art), his cheapest premium was £372, but when he listed himself as an artist, it was reduced to £343.
Which? believes that insurers need to be more transparent in how they determine the quotes they generate for consumers, and that insurers should be able to explain to drivers the factors that have influenced their premium.
Jenny Ross, Editor of Which? Money, said:
“When it comes to buying car insurance, drivers should be more empowered than ever thanks to comparison sites, incentives, and introductory offers. So it’s concerning to find that drivers may be left out of pocket as a result of factors beyond their control.
“To beat these pricing quirks, be sure to compare different routes for buying your insurance, look at various levels of cover from different providers, and shop around every year to make sure you’re getting the best price.”
Insurance Edge Comment:
Everyone in the industry knows that insurance is all about personalisation of data now, broad brush strokes simply do not cut it anymore. The problem with collating data on the claims cost of any accident is GDPR, how can that be shared without breaking the law? Obviously a consumer could say a claim cost just £500 to settle, but some verification would be needed in case it was in fact £5000.
For insurers to charge consumers who are tenants rather than homeowners extra, for anything other than house insurance, is arguably socially divisive and may well spectacularly backfire once a campaign group or charity brings this to the mainstream media’s attention. As an industry, such prejudice betrays an old fashioned 1960s attitude, and we will be rightly crucified for it one day. Then the compensation claims will roll in…
The matter of occupations is something the industry really needs to address, because few of us have just one job now, and many of us will change jobs frequently. Yet that change of job may not have any impact on the driving risk. Let’s be blunt, the big risk regarding accidents is commuting at rush hour times, so if consumers are not ticking that commuting box, then surely your social life driving route and domestic parking arrangements (postcode theft risk) matter far more?