Go Compare the Confused Meerkats at the Money Supermarket

Picture By Charles J Sharp - Own work, from Sharp Photography, sharpphotography, CC BY-SA 4.0, Link

There was a time when renewing one’s car insurance involved visiting tens if not hundreds of individual insurers and comparing their quotes to find the cheapest.  And then someone invented price comparison websites which purport, by the power of Grayskull to be able to scour the internet for you and remove the chore.  However, while initially they did seem to be able to avail one of cheaper insurance over the years they’ve seemed to me to all converge on the same values.  Using the main four websites I find I get a divergence in lowest pricing of only 8 per cent.  This seems very odd.  How do so many different insurers get nearer the same price?  And how come the same insurers give different prices on different websites? 

Now it could be, of course, that any sensible underwriter would value my car and I as the same value risk after performing similar calculations and just always end up around the same market price.  However, instinct would suggest that there’s very little competition in the market then.  For some reason those who’s job it is to take risks seem to me to take little risks. 

Matters are further confused by the layouts of the price comparison sites on their quote pages.  These have become ever more simplistic yet confusing.  For example … many sites ask you to choose a “voluntary” excess for your policy but what they don’t make clear is that there is a separate “compulsory” excess.  These vary from insurer to insurer meaning that when the search values are returned they’re in price order but they’re not weighted in any way to show the cost of actually making a claim because the user can only specify the “voluntary” excess.  Therefore the user is not actually seeing a like for like comparison when they look at the list.  If the search machines were honest then the “voluntary” excess and “compulsory” excess would be combined and just be called the “excess” and any insurer who was not willing to insure for the “excess” the customer requested would be excluded. 

Don’t get me wrong this isn’t a fraudulent practice – all the information is there for those willing to read it but it’s presented in such a statistically complex way the only way to work out whose insurance is the best price and value is to transcribe the information to a separate spreadsheet.

The extent this matters, of course, depends on the value of your motor.  If your car is only worth £1000 and you have a the “voluntary” excess of £150 and “compulsory” excess of £250 then claiming would cost you 40 per cent of your car at which point you’d probably be better going for 3^rd party anyway…

Also there are other things that ring alarm bells about price comparison websites.  Presumably insurers are paying to be on there and they all use algorithms to calculate their quotes which while not all the same all have similar inputs.  Therefore they cannot incorporate any new factor into their calculations and their calculations of risk are all universally set against the same inputs – which does not seem the most subtle method of calculating risk. 

Perhaps this is how they all come out with the same answer…?

Also I notice that the sites year on year seem to become ever less subtle and more simplified.  For example you used to be able to ask for quotes without a courtesy car or without personal injury insurance or without breakdown insurance or without legal insurance and the sites would order the quotes according to these items being excluded but now they don’t seem to do this anymore.   Everything is bundled in as “standard” on quotes. 

One has to wonder too how companies that quote without breakdown insurance or without legal insurance seem to come out further down the list than companies with it … again the sites may show us which insurer is the cheapest but that doesn’t mean we’re actually comparing like with like. 

So this year I went outside the main four sites.  Last year (on the advice of professional Scrooge Martin Lewis) I used Quotezone but this year they were more expensive than the main four.  So I tried Direct Line … my quote was in the same area… so I tried Aviva … who wanted to give me a discount because they want to keep me as a customer for different products.  So in the end I did save about £100.  It was like pulling teeth but I intensely dislike the insurance industry and this made me very happy.  Let’s see if I can push it down further by haggling…

What really confuses me though is that if I don't have a crash my insurance quotes should go down next year because by definition I'm less risk ... but they don't ...by default even if I use price comparison sites they go up?  How is this possible when I'm less and less risk each year?