Insurance comparison sites

Looking for a new health, car, or home insurance policy? CHOICE's review of comparison websites reveals some hidden catches.
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01.Compare the comparison sites


Want all the hard work taken out of reviewing and comparing quotes online? Take a look at our insurance expert's recommendations for:

If you want to do your own research when you need to insure your car or your house insurance is up for renewal, where do you look for information? Many people start with one of the free online insurance comparison websites available for a quote, but can you be sure of unbiased results?

We take a close look at four of Australia’s largest online insurance comparison sites to see how they work - and just how much of the market they are actually letting you compare. All offer health and life insurance, and three also offer car insurance.

Video: Choice anti-ads: insurance comparison sites

In our review of these comparison sites we find:

  • free comparison sites can earn exorbitant fees per sale that constitute a large part of your insurance premiums.
  • some comparison sites are misleading as to how little of the market they're actually comparing.
  • other sites are actually owned by the insurance companies they are supposedly comparing.

Show us the money

When you buy insurance through an online comparison site, a fee may be paid by the provider to the site, either as a fixed percentage of the premium or a fixed payment per sale. The site may also receive trailing commissions, for a period ranging from 12 months up to the whole time you maintain that policy with the provider.

All the sites we looked at divulge how they are paid but none reveal how much. Health funds Bupa and Medibank Private have both called for more transparency in the fees earned by insurance comparison websites. 

“Say you're signing up for a $2000 policy - you don't know that you've just committed $800 for that policy as a charge to the company that put that product on that site,'' says Medibank’s managing director, George Savvides.

While all of the online comparison sites we spoke with denied commissions play any part in their product recommendations, the potential for a conflict of interest is evident - 89% of revenue to iSelect’s health business unit in the financial year 2012 came from just five of their health insurance brands.

“Private health insurers pay aggregators commissions when they convert searches into a sale, creating an incentive to encourage sales of policies that will generate higher revenue," Medibank’s Victoria Hanlon told CHOICE.

Medibank also says the commissions paid to online comparison sites are finding their way back into increased premiums and quotes. Commissions paid to aggregators are funded from the insurers’ advertising budgets, which reportedly rose $90m between 2007 and 2012.

The little guys

The two health fund giants, Bupa and Medibank, have a combined 60% of the health insurance pie. Online comparison sites can give smaller funds a foot in the door - iSelect sold 20% of health insurance premiums in 2012. 

iSelect’s Matthew Cuming says iSelect gives a voice to smaller health funds by bearing the cost of marketing, while NIB’s Mark Fitzgibbon sings a different tune to the other big insurance players: “Anything that shakes up competition and benefits consumers is good.”



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