There's no such thing as a free insurance quote

Direct Line, the insurance subsidiary of Royal Bank of Scotland, has launched a biting attack on the independence and accuracy of online price comparison services. In a new TV advertising campaign it warns consumers to be wary of these sites when searching for cheaper car or home insurance.

Direct Line’s assault on the price comparison business has been condemned by operators such as moneysupermarket.com and uswitch. Moneysupermarket.com claims that it has the technology to include Direct Line quotes in its price comparison searches but that it is prevented from doing so by the threat of legal action from Direct Line.

But the most withering attack has come from Jim Spowart, a former managing director of Direct Line and now chairman of peopleschampion.com, a site which rides on the coat-tails of the moneysupermaket.com aggregator and promises to find the best deals for consumers.

Spowart says he saved a considerable sum when his household switched from Direct Line.

“The policies with Directline were in my wife’s name. The car insurance total premium with Directline was £385.35, yet Marks & Spencer quoted us £267.70  - a  saving of £107.56. This was like-for-like cover. And on home Insurance our total premium was £324.45p, yet Marks & Spencer quoted us £215. 22 - a saving of £109.23. So on these two items our household saved £216.”

Spowart also takes aim at Churchill, another of RBS’s insurance businesses, which throws out a national challenge to customers, yet refuses to list on price comparison sites.

Spowart in turn has challenged RBS chairman Sir Fred Goodwin to explain why the bank thinks it can operate without its products being compared. “We are in a different climate now and there is no hiding place – the banks and insurers have a duty to explain their services – and we’d like to know why they don’t want to be compared against the rest of the market. I think consumers can draw their own conclusions about this.”

Talk about biting the hand that fed you.

Direct Line for its part says that its business is designed to cut out the middle man, and that price comparison engines are nothing more than another middle man.

Which brings us conveniently to the achilles heel of the price comparison companies. Moneysupermarket.com has built its business on the referral fees paid to it by the companies listed in its tables. Peopleschampion is no different. The commission fees are not always transparent, and they ramp up the price for everyone.

As the saying goes, there’s no such thing as a free lunch – or a cheap insurance quote for that matter.