Young drivers have a tough gig. First, they have to find the cash, or build the credit history to buy the car. Then there are about £1000 worth of lessons and test fees to rustle up. After all that, the search for a reasonable insurance quote, plus telematics device is next on the shopping list. But how much is your insurer, broker, or the comparison site, making in commission on the policy? Ah yes, like the frequent use of plastic cogs inside convertible hood motors, that remains one of the eternal mysteries of life…
A new report is calling for increased transparency from the nation’s price comparison websites, as new findings shed light on the practices these websites are using to persuade drivers to part with their money.
As the FCA continues its investigation into the insurance industry, having lifted the lid on loyalty penalties and motor finance commission last month, a new survey of 750 drivers aged between 17-24, published in The Young Driver Rip-Off Report, by insurance startup honcho, suggests the lack of transparency from key household names in insurance is deeper rooted than originally thought.
The study found that 88% of young drivers are unaware that many insurers are charged commission fees to sell their products on price comparison websites and 92% of those surveyed have no idea that the consumer is often required to absorb these costs in their premiums.
As such, as many as 61% of young drivers wrongly believe price comparison websites offer the best prices and just 11% claim to approach insurers directly when sourcing insurance quotes.
According to honcho’s research, price comparison websites typically charge insurers commission of £60 per policy sold, a figure which the consumer is often made to absorb – without their knowledge. Once aware of this, 97% of those surveyed felt this was unfair.
The data also found that 84% had no knowledge that many price comparison websites are not independent – but are in fact owned by insurers themselves -which could compromise how objective their price comparisons are. Gavin Sewell, CEO of honcho, comments: “Price comparison websites know exactly what they’re doing when it comes to squeezing a bit more money out of hard-pressed consumers and they’ve been covering their tracks well.
“We’ve been quietly observing the unfair practices implemented by PCWs for many years now. Indeed, many of these hidden practices contributed to the ideation of honcho, as we saw a need for change in the industry.
“We’re relieved to see that regulatory bodies such as the FCA are finally starting to break their silence on the issues currently plaguing the insurance sector and are looking to put measures in place to restore decorum to this industry.”
honcho is the UK’s first online reverse-auction marketplace for financial services, which is revolutionising the way people buy car insurance, saving them time and money.
A reverse-auction is where consumers receive bids and become the focus of the auction. Companies compete against each other to win consumers’ custom, which is how honcho thinks it should be. Disruptive and innovative, honcho is changing the face of car insurance.