Competition has increased in the online life-insurance industry, and the big winners are consumers. People who get life insurance can firstly use the web to collect all the necessary information to make decisions about their insurance, quickly and easily.The growth of online insurance advice has raised concerns with the authorities who regulate the industry.
The consumer watchdog for the life-insurance industry, the Financial Services Authority, said insurance-comparison websites have helped consumers to find insurance information before making decisions. But consumers still need to investigate and find the right websites for help.The FSA stated in a report: "Consumers should be provided with appropriate information about a policy in good time and in a comprehensible format, so that they can make an informed decision about the purchase of insurance."
Not all UK comparison websites were included in FSA’s review; however one of its outcomes was to identify the features a customer requires to make an informed decision. The FSA is now addressing issues with individual businesses.Reviewing individual businesses could be difficult for the FSA with hundred of businesses providing insurance and many times that number operating as online "broker" selling insurance and leads.
In 2006, the Association of British Insurers reported that 262 insurers sold long-term insurance. Many of these solely dealt with long-term insurance, while some dealt with both long-term and general insurance. The ABI recorded that independent financial advisors were the main vehicle of long-term insurance sales.Since the ABI report, growth of the number of comparison websites has exploded.
These services have been used to sell general insurance for a long time. And as they continue to grow and prosper, providers are broadening their reach to other products such as long-term insurance.
The FSA noted the rapid growth of this product in its latest review of insurance- comparison websites.A life-insurance comparison website works like a shop front. It collects your information and shows available policies but the ultimate decision and contract is made by a third party who is sold the lead.
Just like a shop front they offer some products but not all of the available brands. In fact some of the bigger insurers are not marketed through insurance comparison websites at all.So what is the process? Most comparison websites make a series of assumptions about the user before delivering a quote. These assumptions many include age, occupation and hobby (all of these qualities have an influence on a policy).
Many of the life-insurance sites do not provide real-time quotes. Rather comparison websites send the information to an insurance company which contacts you about life-insurance policies, or they have their own brokers who contact you for more information.Very few of the sites that promote themselves as finding cheap general insurance offer to find clients cheap life insurance.
The FSA noted that some sites struggled to service customers: "Providing the ability to compare products is at the heart of what insurance comparison sites are trying to achieve. However, our review highlights that sites are achieving this with varying levels of success.""Sites comparing a limited number of features, and in particular where comparison is only on the basis of price, should explain to consumers in a clear and timely way that the products being compared may have different features, and that features, other than price, should be taken into account before purchasing a policy."There is no doubt that comparison websites benefit the consumer, by offering a platform where customers can compare the life-insurance policies of various companies.
The advantage of this system is that customers do not need to invest a lot of time into information gathering and they are more likely to check a few offers before selecting one.Customers have easy access to other information on the comparison websites and also from authorities such as the FSA if they have any enquiries about a life-insurance quote. These services help customers to bring more demands to the table when negotiating a policy. The main disadvantage is that not all comparison sites have every product available in the market.
Long-term insurance can be a complicated process which means a company may make very general assumptions about customers, or they will not be able to receive a quote instantly. Instead customers receive a call or email from an insurance "broker" to discuss policies.Regardless of the method of quotes, by offering comparison services and regulatory information in the one place, the customer has the advantage in negotiating any insurance policy.
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