Motorists could end up paying hundred of pounds more than they should for car insurance because of how insurers interpret data provided by comparison sites.
Assumptions made by providers using the information fed by a comparison website can substantially inflate the premiums offered to drivers, found a new investigation by watchdog, Which?.
In one scenario tested by the consumer group, an insurer had wrongly assumed a driver had made a claim for damage because there was no option for a user to enter this information.
As a result of the incorrect interpretation of the data, the insurance firm quoted £200 more than it should have.
Inconsistency: Motorists could be paying hundred of pounds more than they should for car insurance because comparison sites provide limited data to providers, says Which?
Which? said the issue lay with how information is collected from motorists for quotes, especially when using comparison website.
Drivers are asked a single set of questions agreed by the insurers on the panel rather than answering each insurer’s unique set of application questions.
This can lead to insurers gathering slightly different information about individuals to base their prices on than they would otherwise if the user had gone to them directly and answered the provider’s specific set of questions.
Two insurers told the consumer group that this difference in data gathering can lead to different prices being quoted for the same person.
For instance, just one of the four major comparison sites used by Which? asked drivers if they owned a dashcam or not.
With some providers offering discounts of as much as 15 per cent for those who have one of the devices, it means anyone buying insurance through a comparison site could be losing out on this substantial saving.
Which? also found that while it is compulsory to declare all recent driving incidents in all cases, not every comparison sites let you specify which, if any, of these instances led to insurance claims, resulting in some insurers making incorrect assumptions.
When checking the questions sets of four major comparison sites, Which? found that Confused.com and MoneySuperMarket did not let drivers specify whether they had claimed on a reported incident.
Which? tested a scenario using both sites, where a south London-based driver had recently damaged his Honda Jazz, but had not claimed for the repairs.
When researchers contacted the providers to check the quote, two insurers – Hastings Direct and Churchill – had incorrectly assumed the driver had made a claim, and factored this into the premiums quoted.
When corrected, Hastings Direct lowered its quoted price by £10, but Churchill lowered the premium by a whopping £207, which was more than a quarter of the initial quote.
A Hastings Direct spokesperson told Which? that it encourages its price comparison partners to ‘provide as much specificity as possible in their question set’ but admitted that it was ‘ultimately their decision to make’.
A Churchill spokesperson also responded to the investigation, stating: ‘Anyone purchasing through a price comparison website who is unsure of what details need to be provided, then there is still an opportunity for them to phone their preferred company to provide any further detail, should they feel it might have an impact on their premium.’
The study also found that almost irrelevant information about a customer also had a big impact on prices.
Details about whether the driver was a home owner and marital status affected the car insurance price they were offered.
Which?’s investigation ran quotes for a 35-year-old male Honda Jazz driver living in South London
Which? ran a separate set of quotes for the south London-based driver, and found that insurance was around four per cent cheaper if they were a homeowner, and four per cent more expensive if they were divorced than if they were married.
Job titles also had a big impact on prices, even when similar occupations were entered.
For instance, when the customer was listed as a painter (working in art), his cheapest premium was £372.
However, when he was listed simply as an artist, it was reduced to £343 – a £29 difference.
Which? believes that insurers need to be more transparent in how they determine the quotes they generate for consumers, and that insurers should be able to explain to drivers the factors that have influenced their premium.
Jenny Ross, Editor of Which? Money, said: ‘When it comes to buying car insurance, drivers should be more empowered than ever thanks to comparison sites, incentives, and introductory offers.
‘So it’s concerning to find that drivers may be left out of pocket as a result of factors beyond their control.
‘To beat these pricing quirks, be sure to compare different routes for buying your insurance, look at various levels of cover from different providers, and shop around every year to make sure you’re getting the best price.’
Confused.com said it was ‘working closely with insurers’ to make sure the questions asked on the site give ‘an accurate picture of the customer’.
‘While we are constantly reviewing our quote process, it is up to individual insurers to determine how they rate on individual risks,’ a spokesperson added.
‘If we recognise that customers are disadvantaged we will pick this up with individual insurers.’
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