Comparison sites: do they really offer the best deals?

Time-poor business owners and executives might be tempted to use comparison websites rather
than do their own research when it comes to insurance and energy. But do those sites really offer
the best deals? Energy Ninja explains why you should do your own research.

In a fast paced technologically driven society, time-poor business owners and executives might be
tempted to use comparison websites rather than do their own research when it comes to insurance
and energy. It’s tempting to leave it to those services that offer to find the “best deal” for them. The
additional bonus is that these services declare themselves to be “free”.
However, are you really receiving unbiased recommendations from comparison companies, or is
there a trade-off? Each comparison site has several retailers that they compare against, but do not list
all the potential retailers available. Some comparison sites are paid as either upfront commission and
sometimes trailer payments per monthly invoices. Other sites operate on a "cost per click" model.

In June 2017 Choice Magazine investigated insurance comparison sites and found:

  • ‘Free’ comparison sites can earn substantial fees per sale from the insurers.
  • These fees can make up a sizeable chunk of your total insurance premium.
  • Some sites compare only a fraction of the market.
  • Some sites are owned by the insurance companies they're supposedly comparing.

Choice Magazine February 2018 edition also noted the following observations and complaints about energy comparison sites:

“People who visit only one commercial comparison site may not find, contrary to their reasonable
expectations, the ‘best’ electricity deal available”

“Some of the comparison sites are arguably making representations (directly or by omission) that lead
users to incorrectly believe they would find "your best deal" on their site.”

“In some instances, different sites recommend the same electricity plan but with different estimated
levels of savings, which raises questions over the accuracy of the calculations used.”

“Some of the commercial sites don't provide the user with all the relevant terms and conditions
associated with electricity plans so they can make an informed decision before switching.”

“The characteristics of retail plans, including tariffs and relevant fees and charges, make it difficult to compare plans effectively.”

Many of the comparison sites will also have a fine print disclaimer stating that once the consumer
connects to the insurance or energy retailer, that they are no longer responsible for any further
business with the retailer and product. The consumer is left to deal with any implications in the course of transition or implementation of the plan on their own. They may also hold a disclaimer about
possible products and services not being available to some customers.

Personal Experience

Towards the end of 2018, I rang a newer comparison site to find out who they would recommend as
an energy retailer. Possibly unfairly, I interviewed the sales person on the phone about how they
would find me the best energy plan, what components of my bill were they looking at and comparing,
who the retailers available were, and which retailer paid the highest commission. The sales person
struggled to answer some of these questions, and when asked who was paying the highest
commission, I was referred to a supervisor who would “return my call”. Unsurprisingly, I didn’t hear
back.
Not for Profit Comparison Sites
There are not-for-profit comparison sites available: Energy Made Easy and Choice Magazine. Both
are reliable non-profit organisations.

Energy Made Easy is government run. It lists energy retailers, their plans and provides cost estimates based on the consumer’s energy usage and postcode data they enter.

To receive an unbiased comparison for health, household, pet and vehicle insurances, ChoiceMagazine provides free comparisons as a not for profit product research organisation. Good professional Insurance Brokers are usually also quite transparent in terms of the insurance companies they work with and the commissions received from each of their product retailers.

When considering changing your insurances and energy plans, it will be worth your while to do your
due diligence and homework on the aspects you need covered on. Compare each of the comparison
site offers. If you still choose to use a profit driven site, consider the not-for-profit sites or a
professional broker in their specialised area. Always read the fine print, disclaimers and policies of the comparison sites before signing up, or “Caveat emptor”- let the buyer beware!

Engaging with caution should help give you a win on your insurance and energy bill payments and
ensure there are no hidden costs or unknowns.

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