In a fast paced technologically driven society,time-poor business owners and executives might be tempted to use comparison websites rather than do their own research when it comes to insurance and energy. It’s tempting to leave it to those services that offer to find the “best deal” for them. The additional bonus is that these services declare themselves to be “free”.
However, are you really receiving unbiased recommendations from comparison companies, or is there a trade-off? Each comparison site has several retailers that they compare against, but do not list all the potential retailers available. Some comparison sites are paid as either upfront commission and sometimes trailer payments per monthly invoices. Other sites operate on a "cost per click" model.
In June 2017 Choice Magazine investigated insurance comparison sites and found:
- ‘Free’ comparison sites can earn substantial fees per sale from the insurers.
- These fees can make up a sizeable chunk of your total insurance premium.
- Some sites compare only a fraction of the market.
- Some sites are actually owned by the insurance companies they're supposedly comparing.
Choice Magazine February 2018 edition also noted the following observations and complaints about energy comparison sites:
“People who visit only one commercial comparison site may not find, contrary to their reasonable expectations, the 'best' electricity deal available."
“Some of the comparison sites are arguably making representations (directly or by omission) that lead users to incorrectly believe they would find "your best deal" on their site.”
“In some instances, different sites recommend the same electricity plan but with different estimated levels of savings, which raises questions over the accuracy of the calculations used.”
“Some of the commercial sites don't provide the user with all the relevant terms and conditions associated with electricity plans so they can make an informed decision before switching.”
“The characteristics of retail plans, including tariffs and relevant fees and charges, make it difficult to compare plans effectively.”
Many of the comparison sites will also have a fine print disclaimer stating that once the consumer connects to the insurance or energy retailer, that they are no longer responsible for any further business with the retailer and product. The consumer is left to deal with any implications in the course of transition or implementation of the plan on their own. They may also hold a disclaimer about possible products and services not being available to some customers.
Towards the end of 2018, I rang a newer comparison site to find out who they would recommend as an energy retailer. Possibly unfairly, I interviewed the sales person on the phone about how they would find me the best energy plan, what components of my bill were they looking at and comparing, who the retailers available were, and which retailer paid the highest commission. The sales person struggled to answer some of these questions, and when asked who was paying the highest commission, I was referred to a supervisor who would “return my call”. Unsurprisingly, I didn’t hear back.
Not for Profit Comparison Sites
There are not-for-profit comparison sites available: Energy Made Easy and Choice Magazine. Both are reliable non-profit organisations.
Energy Made Easy is government run. It lists energy retailers, their plans and provides cost estimates based on the consumer’s energy usage and postcode data they enter.
To receive an unbiased comparison for health, household, pet and vehicle insurances, Choice Magazine provides free comparisons as a not for profit product research organisation. Good professional Insurance Brokers are usually also quite transparent in terms of the insurance companies they work with and the commissions received from each of their product retailers.
When considering changing your insurances and energy plans, it will be worth your while to do your due diligence and homework on the aspects you need covered on. Compare each of the comparison site offers. If you still choose to use a profit driven site, consider the not-for-profit sites or a professional broker in their specialised area. Always read the fine print, disclaimers and policies of the comparison sites before signing up, or “Caveat emptor”- let the buyer beware!
Engaging with caution should help give you a win on your insurance and energy bill payments and ensure there are no hidden costs or unknowns.
About the author: Candice Delac is the Chief Energy Efficiency Consultant at Energy Ninja, a consultancy that assists business and home owners to reduce energy costs.