02.The whole picture?
In the past, ASIC has identified that some online finance comparison sites aren’t clearly disclosing that they only compare a limited number of brands and, in turn, quotes. With the exception of Canstar, all the sites we reviewed compare policies and provide quotes from a third - or less than a third - of all health insurance providers and even fewer for car insurance.
In 2007 the ACCC accused iSelect of engaging in misleading conduct by misrepresenting in ads and on its website that it provided comparisons of all health insurance cover available. iSelect subsequently provided a court-enforceable undertaking for a period of three years that it wouldn’t make representations that it compares all insurance policies, unless it was actually the case. Matthew Cuming told CHOICE the company learned from the experience and took it as an opportunity to improve and implement regular reviews of website content.
However, in 2011 Bupa sought a federal court order to stop iSelect making claims in its TV ads that it would pay $499 to anyone who was forced to serve a waiting period when switching to a new health insurance policy. The basis of Bupa’s complaint was that it was misleading, because under Australian law no one has to re-serve waiting periods when they change to an equivalent or lower level of hospital cover. But iSelect launched a cross-claim against Bupa, contending that the law does not apply to extras cover.
Both claims were dismissed by consent, and in a court-ordered mediation iSelect again gave a three-year undertaking - this time to, among other things, refrain from stating that it compares “most” or a “wide” range of health insurance products and funds unless this is the case.
When ASIC took a close look at online insurance comparison websites, they found insufficient disclosure of the relationships between website operators and the issuer of the brands being compared on some. Indeed, there’s significant potential for conflict of interest in the ownership structure of some of the free comparison sites and their quotes.
Choosi.com.au, the second-most used site after iSelect, is owned by Hollard Financial Services, a major provider of life insurance and the distributor of seven of the insurance brands available on the site.
New entrant Compare the Market is owned by Budget Holdings Limited (BHL). BHL in turn, owns insurance giant Auto and General, encompassing local brand names such as the car insurer Budget Direct.
When we carried out a shadow shop for car insurance on the online comparison websites, we found that five out of the six top results on comparethemarket.com.au were Auto and General Insurance policies and quotes. However, this may be more an indication of their position in the market, as the top-ranked results for the same scenario on two other sites, iSelect and Canstar, were all underwritten by Auto and General.