In its letter, the FSA expressed concerns it had regarding the fair treatment of consumers in the wake of last summer’s review of 19 different providers of discount car insurance over the internet. The FSA found compliance failures in regards to several different activities of these online car insurance websites which could ostensibly result in consumers not receiving fair treatment, according to the letter.
Such comparison sites have proven to be quite popular in the UK, as more than half of insurance policies are purchased through such sites. According to industry estimates, just four years ago the total policies purchased online was just one-quarter of the total.
However, these online providers have proven to actually inhibit profitability of many insurers. This is because allowing penny-pinching policy holders to find the least expensive policy on the market has led to insurance costs rising by an average of more than 40 per cent over the past 12 months.
Additionally such comparison sites have also led the insurance market to become concerned that consumers are more readily providing incomplete or inaccurate information in order to reduce the costs of their policies. The FSA remarked that consumers may end up not covered due to a lack in disclosing all the material facts, which could cause an insurer to pay out either partly or in full on a policy in such an event.
One insurance company, Confused.com owners Admiral Group, responded to the letter, by stating that they were highly conscious of their responsibilities to their customers.