Price comparison websites can charge insurers and intermediaries multiple times for hosting their products and even do so without completing a sale, according to the British Insurance Brokers Association (BIBA).
The trade body highlighted practices by price comparison websites which it said can wipe out almost a full commission and leave only a very small margin for product providers and brokers.
BIBA CEO Graeme Trudgill told the House of Lords Financial Services Regulation Committee how price comparison websites charged brokers and insurers for hosting their products.
“If a broker or insurer has a product on a comparison site they will have to pay a fee,” Trudgill said.
“That might be a fee when a client clicks on to that particular provider’s product but there will be a fee when that product is sold as well.”
Trudgill also expanded on the scale of those fees and how this can leave very little for the provider or broker to earn from the sale.
“The fees will vary depending on the class of insurance and the particular site, but they are quite significant and I believe those fees would take out the vast majority of a broker’s commission and you have a very small margin for products sold on comparison sites,” Trudgill added.
Trudgill’s evidence to this week’s session on regulation of the consumer insurance market also outlined how price comparison websites were the “dominant” channel but artificial intelligence services were becoming more commonly used by consumers.