Warning! Before going on a comparison website when buying motorcycle insurance, better first check a few simple facts and acquaint yourself with some of the tricks and underpinnings.
Firstly, it isn't all about getting the cheapest insurance for your motorcycle. Yes, if you're a little cash-strapped you might think that getting the lowest price is what you need. And in the very short term that might even work. But insurance companies aren't run by people anymore—assuming they ever really were. Insurance companies are run by actuarial tables and computers and algorithms and don't care for you personally. They simply want your money. Comparison sites, meanwhile, are generally run by indifferent middlemen; indifferent to everything, that is, except the contents of your wallet. And these two groups have developed a symbiotic relationship—and a very reluctant one as far as the insurers are concerned.
That's the simple, brutal truth—which we all secretly know, but still need to be reminded of every once in a while. It all about the money, and these days most of us have been artfully conditioned to look solely for the lowest price.
However, what you should really be looking for isn't necessarily the cheapest insurance company. That's generally a mistake. Like everything else in life, you get what you pay for, and what you should be paying for is the best deal—and that might not be the cheapest. You might "save" ten, twenty, fifty or a hundred quid now, but a little further down the road you just might have the misfortune to find out exactly why some firms are better than others.
You might, for instance, inadvertently find yourself signed up to an abnormally high excess. Or there might be overlooked hidden and unfavourable terms and conditions. Or to paraphrase motorcycling author Robert M Pirsig, the context of the questions you're asked might be too small for the answers you need to give.
And remember too that not all motorcycle insurance companies are accessible on comparison websites. If we at Sump were in the business of selling insurance, we certainly wouldn't parade ourselves alongside the rest of the industry hawking our product and driving our prices down to bargain-basement levels. We'd aim for other factors such as great customer service, reliable support, timely back up, old-fashioned honesty (as opposed to modern chicanery and sharp practice), and good value (which isn't the same as the cheapest deal). And yes, with such highfalutin principles we might not stay in business long. But for now, we can at least lay pretence to such lofty standards of moral rectitude.
Competitions and Marketing Authority
An ex-member of the Competitions and Marketing Authority (CMA) told us:
"Not every product or service will be available on every motoring or motorcycling comparison website. All insurers are looking for niches and hoping to tailor their deals for the individual. But in reality, that's simply not possible. There are always compromises. So one comparison website might be strong in one area with a given range of products, whereas another might be strong with another range of products.
"It's doubtful that a buyer will ever get exactly what he or she wants; certainly not for the more complex policies that might involve poor driving or riding history, or age issues, or residential issues, or issues with modified vehicles. And bear in mind that factors such as credit history and matters relating to an applicant's employment or marital/domestic status has a bearing on an insurance quote. And that can vary hugely between companies and comparison sites.
"The problem is, by checking with multiple price comparison websites, an applicant might eventually find the best deal available, whatever that means in a specific instance. However, the whole point of a comparison website is to visit a single buying portal and fire-off a broadside application hoping to hit the right seller. What would interesting is a comparison of price comparison sites. That might be revealing, and possibly very amusing."
"Another important issue is the "language" and terminology used on different comparison sites. One site might consider low mileage to mean one thing, whereas another might mean something very different. Consumers can quickly become very confused about how to respond to specific questions and often end up giving answers that suit the program or entry field as opposed to giving more accurate answers. And that in turn could have serious ramifications further down the road should a claim be made."
These misconceptions might not arise so frequently were an applicant speaking to a live insurance agent. But even then, there is a distinct lack of consistency and transparency in the market—and more than a whiff of anti-competitiveness, not least with regards to issues such as "Most Favoured Nation" or "MFN") clauses.
"Most Favoured Nation" clauses
Most Favoured Nation clauses are deals (often reluctantly) struck between, say, an online insurance price comparison website and an insurance firm. The online site wants to ensure that a customer cannot get a cheaper deal by going direct to the insurer. The site wants total control. Hence an MFN deal.
Yes, the insurance firm might genuinely want to market its product on a comparison website and thereby increase its reach and profile, but it might also want to offer direct deals that are the same, or similar, to that being promoted via a third party. But once again, that option is closed where a MFN deal has been struck.
If the insurer refuses to deal "most favourably", that firm might find that its product is refused access to a given comparison site. That in turn could seriously hit business. So the insurance firm in question acquiesces/caves in. Of course, if the company is big enough and powerful enough (such as Aviva), it can ignore/sidestep the comparison sites and invite prospective purchasers to deal direct. But most smaller brokers have no such clout.
What's happened is simply that a middle man (i.e. the comparison website) has squeezed in between the insurer and the customer and is raking off a percentage of the costs, and he/she isn't interested in resolving your wider needs—not that many insurance firms are either when you dig deep enough. But we've little doubt that the best price comparison sites out there are no match for the quality of service available from the best insurance companies.
Come to that, there are still a few old fashioned high street insurance brokers out there too who, despite being middlemen/middlewomen, nevertheless provide good care and long term support for all your insurance needs (domestic, travel, life, pet, etc). But the price comparison site is a more ruthless/mercenary creation. Think Ryanair or EasyJet.
And remember; when you're on a price comparison website watch out (figuratively rather than literally) for the treats and offers being pushed at you from lateral directions. In other words, comparison sites sell promotional space to all comers, and many of these relationships involved competitive commissions if not outright kickbacks, which usually amount to the same thing.
Also, watch out for upselling attempts which, in the heat of financial battle and "bargain price" attacks, could sell you nothing that you really needed, or wanted, but slyly push your budget way above where you wanted it to be.
Aren't MFN deals anti-competitive?
Yes. Arguably. And therefore illegal. But an individual deal might not be actionable depending on how the deal is/was nuanced. And if you've ever blackmailed anyone, you'll know that there are different ways of saying things that ultimately end at somebody's wallet or purse. Currently there are legal arguments and lawsuits underway intended to resolve this problem. But of course, there will always be ways to slip around the rules.
C.A.R.E in the industry
The regulators of the insurance industry expect firms to sign up to the C.A.R.E principle meaning: Clear, Accurate, Responsible and Easy to use. But there will always be new players with lower ethical standards (and this in an industry that's already considered rife with low ethics and dubious financial probity).
Currently, around ten million people in the UK each year use comparison sites—and in fairness, many get exactly what they need at the right price. But others don't, and motor insurance is an especially tricky area; more so than home insurance or even life insurance. That's because the variables are greater, and often motoring accidents are very complex resulting in long term legal issues that challenge the skills and resources of lesser players.
Ultimately, the way to get the best insurance deals is simply to live right. Yes, that sounds a little hackneyed and banal. But driving at the right speed, paying your bills on time, living on the right street, marrying the right man/woman, behaving yourself in the community, owning a moderate vehicle, etc, will better your chances and will help make those comparison websites redundant.
Above all else, understand buying insurance simply isn't a deal that should be struck quickly. "Contracts" form the largest area of English law, and insurance is a very complicated contract. Yes, the industry does much to simplify it and make it accessible to the common man. But underlying all the questions and conditions are very delicate agreements, often with a huge range of interpretation. And for that, it's as well to have someone on the other end of the phone who can at least explore your doubts if not necessarily supply exactly the answers you want.
Consequently, check that comparison website if you must. But our advice is to (a) talk to your friends and see who they can—and can't—recommend (and make sure you ask why or why not), and (b) talk directly to at least two insurance firms and try to fathom the reasons for their (often wildly)differing prices.
In short, don't just compare price with price. Compare quality with quality.