Given that technology has brought such convenience to so many aspects of our lives, it’s hardly surprising that many individuals in the insurance market turn to price comparison sites.
After all, as the television and print advertisements boast, these services can save time and money when trying to arrange a variety of cover for our homes, health, holidays and cars.
However, as popular as some of the major operators have become, questions are being asked as to whether they actually provide consumers with genuine value for money.
Only in the last week or so, in fact, the Competition and Markets Authority (CMA) has issued a paper warning that consumers are potentially at risk of a “tremendous amount of harm” from the kind of algorithms which are key elements in the operation of many online firms, including those in the financial services industries.
That publication, in turn, came just a few months after the Financial Conduct Authority (FCA) called for reform of the pricing structure of home and motor insurance markets as part of its campaign to “ensure consumers will receive fair value“.
Price is, of course, a consideration when people either come to take out new policies or renew existing ones.
Despite certainly not being opposed to the idea of making insurance easier to obtain, I would argue, though, that neither price nor speed should be the primary concerns.
What, for instance, about the small print which could render claims made under those cost-effective policies invalid?
That’s not an insignificant point to raise. Recent figures issued by the Association of British Insurers (ABI) showed that almost one-fifth of domestic property claims were rejected.
Insurance is about risk with insurers providing cover which they believe to be appropriate to policyholders based on the information which they disclose about their homes, contents, mileage and other habits.
In the few minutes which we’re told it takes to apply for insurance, there are only so many details which all but the most organised people can include.
And, in the couple of ticks needed for online sites to offer us a multitude of quotes, there is only so much investigation of that material which the computer systems can undertake.
There’s simply not much time to enquire about the specific possessions, the details of our home security set-up or the lives that we lead – those strategic priorities which are so important to us that we want to insure them in the first place.
It only takes a glance at the personal finance pages of many national newspapers or consumer affairs programmes to see how the failure to make a full and accurate disclosure can have costly consequences for policyholders.
Regardless of how wealthy a family is or not, anyone’s insurance position can be made complex if there’s a lack of clarity.
I would like to think that there are not many individuals who choose not to make full disclosure because they think that they’ll lower their bills.
Instead, I think that they simply don’t realise that the greater the degree of information they provide, the better their chances of not being paid out in the event that they have to make a claim.
That’s something which, as smart and as quick as they are, few computer systems or algorithms will ever fully understand.
Until they do, there’s some reassurance about insurance which involves a little human touch – a conversation to avoid what might well be expensive mistakes.
Written by Eleanor Moore Cert CII, Director of Private Clients