They’re often heralded as consumer champions, giving individuals access to the whole (or a much larger proportion) of the market than they would have been able to access independently. But I wonder how much the presence of the comparison sites has actually inflated the costs we all pay as a result of the fees that they charge (to the insurers and other financial services companies).
The main comparison sites: Moneysupermarket.com, Compare the Market, Confused.com and Go Compare are all very profitable organisations in their own right. They must be making their money somewhere and since they don’t directly charge consumers for their custom, they must be making money from the insurers and other providers that they work with. And this cost must be funded somehow… so I believe this ‘cost of acquisition’ of a customer must be being passed on to the end user. It therefore has to be a false economy of some magnitude, arguably with inflated premiums for an end user to accommodate the extra costs the organisations are paying to the comparison sites. We may be getting access to a wider array of deals, so we can see the best rates in the market – but if the rates are all higher as a result, is that really benefiting anyone – other than the comparison sites?
To soften the impact of the inflated costs, there are different ways to benefit from the sales process that gives something back to the consumer. I’ve listed a couple of examples below that I’m aware of, where you’re additionally rewarded for using the services. I’ve used the cashback providers repeatedly and I’d highly recommend them.
The recently launched Meerkat Movies is a good example of one of the incentives these comparison sites offer to tempt consumers to use their services. On the surface, it seems like a great offer. Buy an insurance product after having compared through the comparison site Compare the Market and then you’re eligible to 2-for-1 cinema tickets every Tuesday and Wednesday for the following 12 months. It’s a better deal than the Orange 2-for-1 cinema deal that was only available on Wednesdays, and it’s valid for the whole year – but what’s the hidden cost?
My car insurance recently came up for renewal and we all know the advice is to shop around for a better deal than the one your insurer offers you, as you’re typically able to better it on the open market. However, having seen the Meerkat Movies deal and thinking I’d like to take advantage of it – my search on the Compare the Market website returned a deal that was over 16% more expensive than the renewal deal offered by my existing insurer. I guess this is how they’re able to fund the Meerkat Movies deal!
Having said that – Hot UK Deals – a money saving / deals website where individuals report back on the best offers, savings and deals they find in the UK as they come across them – has reported a workaround for the Meerkat Movies, whereby you can simply purchase a one day insurance policy for as little as £1.37 and therefore be eligible for the Meerkat Movies offer. If this works, it’s a great piece of advice. Check out the link here.
Alternatively, to claw back some of the money the comparison sites make out of you, consider using one of the cashback sites, like TopCashback. Depending on the policy that you’re looking for, you could save a lot of money! At the time of writing, More Than insurance is offering £106.05 cashback on Landlords insurance, for example. Quidco is the other main cashback site in the UK – and they offer similar, although not always the same, cashback deals on insurers and other online retailers. So it’s always worth checking both of them to see where you can get the best deal. Through Quidco, for example, take out a life insurance policy via the comparison site Confused.com and at the time of writing, you’re able to claim up to £127 in cashback. It’s free money, so you might as well claim it. All you’re doing is sharing the commission the insurer would typically pay to any referring organisation.
It would seem the comparison sites are here to stay – for better or worse. Going to the insurers direct offers no better rates than through the comparison sites, and in many instances you’re missing out on exclusive deals or incentives that are offered through those referral sites. Couple those incentives with various cashback offers (from the cashback sites) and it can soften the deal somewhat, but I just can’t help but wonder if the presence of the comparison sites is actually just costing us all more in the long run.