Recent research from the British Insurance Brokers' Association (BIBA) suggests that consumers are confused about the details of the insurance policies listed on price comparison websites and about the regulatory status of the websites. BIBA also claim that consumers are buying unsuitable products because quote comparisons make too many assumptions rather than retrieving quotes based on an individual's precise details. Click here to review BIBA's Press Release.
The current Insurance Conduct of Business (ICOB) rules for electronic introductions were written before these comparison sites had such dominance in the market. BIBA claims that the websites are effectively offering advice, a regulated activity which the websites must be authorised to carry out - unless they qualify for an exemption.
It is certainly arguable that some of these comparison websites are carrying out the regulated activity of 'making arrangements with a view to transactions in investments' (Article 25(2) of the Regulated Activities Order). This activity can include helping potential policyholders fill in or check application forms (where the person giving assistance has an ongoing relationship with the insurer). There are exclusions from requirements to be authorised, such as that for activities which are limited to the 'provision of information', carried out by a business that 'does not otherwise consist of regulated activities', where the provision of the information is 'incidental' to that business (such as a dentist introducng dental insurance).
It remains to be seen whether the pressure from Biba will result in an analysis by the FSA of the activities of these websites. However, those running such websites are nonetheless responsible for ensuring that they are not carrying on a regulated activity for which they do not have the requisite FSA permission