Price comparison website
Platform querying several rating engines from a single questionnaire and ranking offers, a channel that has become dominant in motor insurance in several European markets.
On January 1, 2022 the FCA banned price walking in UK motor and home insurance. A renewing customer can no longer be quoted more than an equivalent new customer coming through the same channel. The rule went straight at the model price comparison websites had built over fifteen years, a cut-price opening quote to win the top slot, clawed back over the following renewals. An aggregator changes market structure as much as distribution. Once prices sit side by side on similar cover, a premium above the segment median stops selling, and competition drives ever finer rating segmentation. Business written through the channel churns more, since customers shop again at every renewal, so acquisition cost is spread over fewer years. Pricing actuaries also see that these price-sensitive buyers do not always run the same loss experience as other customers with identical rating factors. The aggregator is paid by the insurer, per click or per sale. The ranking on screen is therefore not purely a price ranking, and the customer often does not know that. In the EU, a site that lets the customer conclude the contract falls within the Insurance Distribution Directive.
The British conduct authority banned price walking in motor and home insurance from January 1, 2022, by requiring that the renewal price offered to a customer not exceed the price offered to an equivalent new customer. The measure directly targeted the model born of online comparison, where the headline price was financed by the following years.
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