“Great headline but where is any actual substantiating information or basis for any of the cover provided?” wrote Peter Rainey (pictured above), managing director of Actuate Insurance Broking.
“It is so very frustrating to continually read these types of articles simply promoting a price comparison service,” continued the Bendigo based broker’s email to Insurance Business.
Rainey took issue with an IB article headlined: “Natural disasters force Australians to ditch home insurance.”
The IB article was based on research from Mozo, an online financial comparison service. The research found that two in five Australians who cancelled their home insurance due to the rising cost of coverage live in areas affected by natural disasters.
What IB didn’t explicitly say in the article is that Mozo compares financial products, including insurance offerings, based, according to its website, on researching the quality of the offerings, not just their price. The Sydney-based firm describes itself as a team of “financial revolutionaries” with a team of 45 including data researchers, an actuary, accountants, economists, product specialists and journalists.
Mozo is independently owned and has a financial services license (AFSL) but does receive commissions via the products it compares on its website.
However, Mozo is not an insurance brokerage and Rainey’s gripe was understandable.
“The media and the government for that matter, only ever produce articles about shopping around to save money,” he said in his email. “Many of these comparative facilities only ever consider and compare price.”
Rainey said often the actual benefits of the product, in this case insurance cover, or any alternatives, “are never mentioned or considered.”
In Mozo’s case this part of the broker’s criticism does not apply, but some price comparison sites do likely deserve Rainey’s harsh criticism.
“Like the majority of things in life, you get what you pay for,” he said.
Rainey’s strong advocacy for brokers includes despairing that price comparison sites ignore his profession.
“There are never any suggestions proposed or even a mention to seek assistance from a qualified insurance broker,” he said. “An expert in this field is usually armed with an array of options secured by quality products containing real benefits and limits.”
He said “experts” like insurance brokers are also “well versed in risk management with tools that may also reduce premiums or at least manage risk to avoid or mitigate any claims.”
Rainey said a major advantage of buying insurance through a broker is that a customer can consider various options of “quality insurance products” and “may also save money as a result.”
“In crude contrast,” he said. “Members of the public do not service their own vehicles via a comparison website, nor can they obtain tailored legal advice or detailed accountancy practices from these sites.”
However, while he conceded that price-based products do have a place in the direct market, he lamented that the offerings of insurance brokers don’t receive enough attention.
“More effort should be put into presenting insurance brokers as a valued solution to people’s insurance and risk management needs,” said Rainey.
He said many people are unaware that the direct market coverages offered by insurers are the same as the products offered through a broker.
“However, these direct offerings are almost always significantly different from a broker’s offering in the policy coverage, the additional benefits provided and the limits,” said Rainey. “Insurance products are NOT all the same and cannot be simply compared on price alone.”
Mozo would agree with him. The research by this firm that formed the basis of IB’s report even raised the issue of underinsurance.
“What’s more concerning is many are likely paying these rising premiums without realising they’re underinsured,” said Mozo’s Rachel Wastell. “If you’re living in a natural disaster-affected area, and you’re paying for home insurance, you should double-check that you’re fully covered.”
However, Mozo didn’t mention the option of using an insurance broker. Thanks to Rainey’s efforts, perhaps next time they will.
What do you think of price comparison services? How can insurance brokers raise their profile so they receive more attention from consumers and the market? Please tell us below.
