The FSA are not saying that they want to check how these sites fit in the whole distribution pattern, what they are saying is that “consumers may be being misled”. This is a bit of a sledgehammer blow, it is like the government telling the automotive industry that cars are being sold which may not have the right brakes. It is such an integral part of our industry, to talk to customers to understand what their business insurance needs and wants are.

We do not like the fact that these sites have pre-filled boxes, by the dozen, that assume this and expect that and lo and behold, when the customer gets to the end the quote is very cheap. It is cheap because they are supposed to have a Redcare alarm, they need to have full shop front roller shutters, they need to have BS3621 locks, they must have five years trading experience, they are not in a flood area, they do not have DSS tenants living above etc etc. The systems assume and the only reason they do this is because they want to sell on price.

If they got the full facts on every single risk then we know full well that they would not be quoting the dirt cheap prices they do. In addition to the assumptions that are made, we have the second issue of the actual quality of the policy they get. Is it made clear to the customer that they only have £1,000 glass cover, the theft excess is £500 and they don’t have portable equipment or legal expenses cover? To name but a few. Of course not. We think these sites have a place in the market, some people want to be able to sort out their insurance cover outside of normal business hours, but when they do this via a website, we would prefer the playing field to be as level as possible.

The full text of the letter can be found here. This is very interesting, to those of us in the industry. We have grown up with the red telephone and Churchill the dog selling policies over the phone. We are happy that they fill a void in the market and, above all, play fair. The comparison sites however, do not in our opinion, play fair either. They flog as many policies as they can based on price and price alone.

If I had a pound coin for every customer that came to us, after having bought a policy from one of these sites, only to find that their cover was not that good or the excesses to high, then I would be going to the same clinic as Wayne Rooney to get some extra hair stuck on my head. We find it extremely frustrating that, as an independent business insurance broker, we have to go through certain processes to ensure we treat customers as fairly as possible. Not that we begrudge this, it is our job and we enjoy going through this process. But, when we get a customer what we consider to be a competitive alternative quote and they say that ABC comparison site has done it for £250 less we have to explain to the customer that there is a fair chance that the alternative is not that good. The customer then thinks that we are just saying that as it is sour grapes but, on many occassions we have had the quotes emailed through to us and everything, from the excesses, to the terms, to the warranties is wrong. If they have a loss, you just know that they are going to be out of pocket. But, the product is sold on price and given where UK plc has been in the last three years, you can kind of understand why price is such an issue.

Let’s see how much of a follow up the FSA does on this, they have had their fingers burned by the disaster with the banks which they really should have picked up on. I hope this is one way the FSA are going to get some credibility back.

Pre FSA, there was another body called the General Insurance Standards Council or G.I.S.C. This was optional to join and there was no real onus on a broker being a member. Most brokers where, but the GISC had no “teeth”.

Without a doubt, the FSA has been good and bad. It has increased the professionalism and financial stability (through regular checks and reporting). However, most business insurance brokers will criticise it for the vast number of rules and regulations which really do not help anyone.

If you are looking for a business insurance quote, you need to know whether your broker is directly authorised (ie they are more likely to be independent) or an appointed representative (ie indirectly authorised and more than likely no independent).

You want a broker that is free to choose, who and where they go to for a quote. Take public liability insurance as an example. For a plumber, using blow torches, as a sole trader looking for a £2,000,000 limit of indemnity. The premiums, depending on your insurer, can range from £250 to £750. Now that is a big difference. You want a broker to not only give you the best cover, but also the most competitive premium.