September 23 2008

Norwich Union ditches price comparison services to go it alone

Insurer Norwich Union has withdrawn from participation in price comparison services and has set up a mini price comparison service of its own. The company promises to show consumers quotes from competitors even if they are cheaper than Norwich Union's own. Are they mad or are they onto a winner? And is there an opportunity here for online retailers to do the same thing?

As belts tighten and margins shrink, taking a second look at the benefits of paying commission to the price comparison engines is only sensible. In the insurance business Direct Line has stood out from the crowd for a while through its refusal to participate and its TV adverts exhorting consumers to come direct to them for a quote.

Now Norwich Union has announced its withdrawal from the price comparison services — and the launch of a comparison service of its own. It's a very clever idea. And it ought to be pretty straight forward to implement. But, unfortunately, it looks as though Norwich Union's execution is less than perfect, causing some very heated debate.

We would love to hear your comments on this one. Is there room for a similar approach in retailing? By only one player or by all the retailers in a sector? And, the big question that's causing a furore for Norwich Union — if you do it should you do it accurately and transparently or could you get away with fudging things a bit? (Yes, I'm pretty sure I know the answer to this one, but you never know...) The details of the Norwich Union offer and the industry's reaction are below. Let us know what you think in the comments...

Here's the main thrust of the official news release (you can read the full release here):

The UK's largest insurer today launches a brand new web and phone service that gives customers the prices and products of its rivals — even if they're cheaper.

Customers seeking a motor quote, on www.norwichunion.com, will be offered new simple ways to check the insurer's motor policy and price against its competitors. They will also be offered the chance to check policy cover and feature details with over 140 other insurance providers in the market.

By giving people an instant service that benchmarks its policy against other providers, Norwich Union believes it will give customers confidence in the price and product it is offering.

David Tyers, director of marketing at Norwich Union, said: "The truth is no insurer is cheapest all of the time; the difference is we will tell customers when we are and when we are not.

"But clearly we hope that we will be competitive for many customers and we know, as a package, our motor insurance represents great value and people will choose to buy from us."

Sounds perfect! But the price comparison services operating in the insurance sector were quick to put out their own press releases explaining the holes in the Norwich Union offer. Here, for example, is what Gocompare chief executive Hayley Parsons had to say:

"In the main, consumers won't be disadvantaged by Norwich Union's withdrawal from comparison sites. The reality is they have struggled to keep their premiums competitive and, unfortunately for them, there's now nowhere to hide for their existing products.

While we respect their decision, we would urge consumers to be extremely wary of their new price checking service, launched this week. This is not a comparison service and I hope consumers aren't drawn in by suggestions that it compares anything of much value at all.

When you visit sites such as Gocompare.com you get a full comparison of actual quotes from over 80 insurance brands. With Norwich Union, they are offering quick quotes which are estimates based on premiums that are two months out of date. These premiums bear little reflection to the actual quote that you will see once you have completed the full quote process.

When you eventually get a genuine quote for a Norwich Union policy you are given the opportunity to compare it against three insurance companies, out of a possible list of nine. This list gives the consumer no indication which of these companies are the best three to compare against, or even if the nine choices they are presented with give them any hope of finding a cheaper quote.

The whole service is confusing, misleading and represents a big step backwards for the insurance industry. Consumers who are familiar with using true comparison sites will find it very unhelpful. Our advice to anyone looking to compare car insurance is to use a real comparison service.

Personally, I hope Norwich Union makes a speedy return to comparison sites with some updated and competitive products."

Let the debate begin...

by Sarah Clark (Web Editor)