Car insurance comparison websites, same insurer different prices?

jercastle

One thing I never understand about these sites, is that with the exact same details, the same insurer will give me completely different prices.

For example. RAC came back with a quote of £465 on one site, £385 on another, £310, etc. And this was not a one off. Got the same result for other insurers too.
Can someone explain why and how this happens? Remember, the details for each site is exactly the same.

Thanks!

jercastle

Sorry for the spelling mistakes. The edit button seems to be missing so couldn't fix the post.

dunstonh

One thing I never understand about this sites, is that with the exact same details, the same insurer will give me completely different prices.

A tin of beans will have a different cost at different supermarkets.

A washing machine could be over £100 difference at different retailers.

Insurance is a retail product and retailers are able to decide what mark up they want to take.   Also, the base cost will also vary with different retailers. 

jercastle

dunstonh said:

One thing I never understand about this sites, is that with the exact same details, the same insurer will give me completely different prices.

A tin of beans will have a different cost at different supermarkets.

A washing machine could be over £100 difference at different retailers.

Insurance is a retail product and retailers are able to decide what mark up they want to take.   Also, the base cost will also vary with different retailers. 

It would be logical to me then that if one goes direct through an insurer, it should be cheaper than using a comparison website, as this would cut out the middleman. However, when testing this with RAC, as mentioned above, the price directly from them was higher than the quotes received from one of the comparison websites.

daveyjp

RAC are a broker, not an insurer. 

jercastle

daveyjp said:

RAC are a broker, not an insurer. 

Ok, but I also tried other insurers directly from their website and the prices weren't rarely lower than the comparison websites.

anniecave

Are different sites using different default excesses or including or excluding different optional extras? (legal cover, breakdown, hire car etc)?

I tend to find quotes tend to be very similar between different comparison sites (there will be slightly different commission arrangements between them.

I've just done something similar and for my details for my car, RAC is £411 on one site and £415 on another site, but the excesses were £50 different.

dunstonh

It would be logical to me then that if one goes direct through an insurer, it should be cheaper than using a comparison website, as this would cut out the middleman. 

It doesn't cut out the middle man.  it creates a different middleman.       Financial products bought direct are often more expensive than via intermediaries.  The reason is the economies of scale and the cost of setting up your own distribution channel and the regulatory compliance and costs that go with that.      

eddddy

jercastle said:
It would be logical to me then that if one goes direct through an insurer, it should be cheaper than using a comparison website, as this would cut out the middleman. However, when testing this with RAC, as mentioned above, the price directly from them was higher than the quotes received from one of the comparison websites.

Insurers look at risk, but they also try to estimate "customers' willingness to pay" (amongst other factors).

i.e, If they think you might be prepared to pay more, they'll quote you a higher premium.

If you use a comparison site, insurers assume that you are 'price sensitive' and will be comparing their quotes to other insurers quotes etc - so some insurers decide to quote low, in order to have a better chance of getting your business.

But if you go direct to their website, they assume there is something specific about them that you like (e.g. you've seen an advert, been recommended by someone, used them before, etc) - so they hope that they can get away with quoting a bit higher, and still get your business.

(This is also why insurers often quote higher premiums for existing customers than new customers - because they hope existing customers might be "willing to pay" more.)

jercastle

eddddy said:

jercastle said:
It would be logical to me then that if one goes direct through an insurer, it should be cheaper than using a comparison website, as this would cut out the middleman. However, when testing this with RAC, as mentioned above, the price directly from them was higher than the quotes received from one of the comparison websites.

Insurers look at risk, but they also try to estimate "customers' willingness to pay" (amongst other factors).

i.e, If they think you might be prepared to pay more, they'll quote you a higher premium.

If you use a comparison site, insurers assume that you are 'price sensitive' and will be comparing their quotes to other insurers quotes etc - so some insurers decide to quote low, in order to have a better chance of getting your business.

But if you go direct to their website, they assume there is something specific about them that you like (e.g. you've seen an advert, been recommended by someone, used them before, etc) - so they hope that they can get away with quoting a bit higher, and still get your business.

(This is also why insurers often quote higher premiums for existing customers than new customers - because they hope existing customers might be "willing to pay" more.)

Fantastic response. Thank you.

I also just discovered that Confused.com is owned by Admiral, which explains why Admiral is usually cheaper on that site.

Sandtree

jercastle said:
It would be logical to me then that if one goes direct through an insurer, it should be cheaper than using a comparison website, as this would cut out the middleman. However, when testing this with RAC, as mentioned above, the price directly from them was higher than the quotes received from one of the comparison websites.

They cut out the middleman but still have plenty of marketing costs to cover... pay Confused.com £60 for a sale or pay Google £25 per click on an advert which may or may not result in a sale.

There are lots of other considerations that you are overlooking... people that go to confused.com (for example) are almost certainly buying on price and so insurers/brokers know this. If you search for "best quality insurance" and then click through to Aviva they know you aren't looking at price alone.

This isnt just ripping off customers though, some insurers will offer different T&Cs depending on where you buy from, have different excess values or different defaults on things like if Legal Expenses are included or not. For example one previous client would add an additional £250 excess and remove Driving Other Cars for quotes via aggregators whereas neither of these happened on direct quotes plus LE cover was defaulted as being included meaning the quoted price was notably higher but so was the level of cover on offer.