Insurance price comparison websites: Are they an effective tool

Author

Maryse Guénette

Organization

Option consommateurs

Published

2018

Summary

Insurance price comparison websites (PCWs) have become increasingly popular in Canada. PCWs provide consumers with a simple, efficient, and often inexpensive means of comparing multiple different insurance products against each other. However, some experts have expressed reservations over PCWs, raising concerns about potential conflicts of interests that may affect the way that results are presented. To investigate this issue, Option consommateurs (OC) interviewed about 150 consumers and conducted a literature review of foreign studies on the subject. OC found that information about the insurance products was often incomplete, with the business relationships of PCWs and their modes of remuneration rarely being discussed. It was also found that the amount of information being collected might be in excess of what is necessary to calculate insurable risk, which raises the possibility that some information is passed on to third parties. Despite the benefits that many have experienced from using these sites, the insurance products being offered to consumers may not always be reflective of their needs.

To help ensure that consumers are not taken advantage of, OC has identified several policy recommendations. Firstly, that provincial legislators mandate that PCWs register as firms so they can be regulated accordingly. OC also recommends that provincial legislatures explore the possibility of eliminating the spontaneous declaration requirement for consumers. With regard to PCWs themselves, OC recommends requiring them to disclose all their business relationships and clearly present the characteristics of the insurance products that they are offering. Finally, it is recommended that consumers exercise vigilance while using PCWs, and that they contact a certified professional once they decide to purchase an insurance plan.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.


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Source: Consumer Policy Research Database

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