How Car Insurance Price Comparison Sites Work

The biggest boom in car insurance over the past few years has been in the price comparison arena. If you’re watching the TV in the evening then the chances are your favourite programme is sponsored by a price comparison website, or if you’ve got the radio on during the day then, without even realising it, you’ve probably listened to one of their catchy jingles on more than one occasion!

Car insurance price comparison is big business. A recent YouGov survey said that customers guessed they were paying around 7% commission for the use of price comparison sites when, in reality, it can be over 20%. That means for a £250 insurance policy the price comparison web site could be making £50 commission – not bad for something that is all done in 10 minutes online.

Convenience Sells

Most of the price comparison sites work really well from your laptop or PC but more and more are offering mobile friendly sites so that you can get a quote from just about anywhere and really quickly too.

So how do these sites work?

The first step is that the price comparison website collects all of the information from the customer about them. What car they have, any additional drivers, any motoring convictions, and the type of policy the customer wants to buy. Then they ask what extras the customer needs like legal insurance, courtesy car and the amount of excess on the policy. As with buying direct from an insurer it is recommended that customers provide accurate and honest answers to these questions to ensure the best price possible.

After the collection of data is done the price comparison site has to send all of the information to the insurers to retrieve the prices. This is generally done using web services called an Application Program Interface or API. This essentially sends all of the customers information to the insurer in a way they want to receive it, and so long as it’s completed fully the API responds with a quote reference and a total price for the policy. The price comparison website then lists these prices in order, lowest to highest.

Or do they?

Well generally they do but you have to remember these sites are there to make money for their owners as well as providing a good service for the customer. Some sites place featured products above the cheaper products. This is perfectly legal as long as the listing is marked as a ‘Featured’ or ‘Sponsored’ product. The website will be being paid to promote products in this way (so it’s another way of earning money on top of commission).

Exclusive Car Insurance Offers

It’s worth looking out for exclusive offers too on price comparison sites as they can sometimes be missed.

You may be offered free or discount breakdown cover when using one price comparison site but not on another. The comparison sites really want your business so they work hard to find little extras that no one else is offering to make sure you’re their customer and you don’t go to a competitor.

There are more ways that the price comparison sites make money from selling car insurance too. Advertising on the site is an obvious way which generates even more money but then these companies are paying huge amounts in advertising fees so need to make a lot of sales or advertising revenue to break even or make a profit.

The large sites like Go Compare, Compare The Market, Money Supermarket and are in a constant battle to get the customers attention through TV, radio and media advertising. In our experience it’s still worth shopping around as each site has their own panel of insurers so you may find a product or insurer on one site that is not offered elsewhere.

Another thing price comparison sites do is store the customers details for next year. So when it’s coming up for renewal time they send out emails to the customer reminding them that their car insurance is due again. Guess what? They’ve already done a new price comparison for the customer to save time – so assuming nothings changed with the car or driver there’s a new policy and new commission ready and waiting.