Insurance price comparison sites (PCS) are well established in Canada. In fact, we've identified nearly a dozen of them, visited by millions of Canadians every year. They're also popular. That's what we learned from interviews with nearly 150 consumers. They like being able to compare several insurance products and make their choice easily, they appreciate the simplicity and speed of the process, and they like being able to find low-cost insurance.
But beware! The experts we interviewed and the foreign studies we consulted express serious reservations about the use of PCSs in the insurance industry, and about their benefits for the consumer. What we found in our analysis of five Canadian sites leads us to share their fears.
The information presented on MLPs about insurance products is often incomplete. The business relationships and remuneration methods of MLPs are rarely mentioned, even though it is quite possible that they may affect the presentation of results or encourage MLPs to sell quickly. The amount of information collected and possibly passed on to third parties is worrying, and could exceed what is required to calculate insurable risk. What's more, MLPs often limit their liability.
This isn't surprising, since MLPs are not required to be registered as law firms (although in Quebec, they soon will be). They are therefore not subject to the same supervision as the latter. In short, even if these sites are appreciated in some respects, consumers may not find insurance products tailored to their needs.
These findings lead us to make a number of recommendations based on our study of the regulatory framework in Quebec and abroad. Option consommateurs therefore recommends that provincial legislators amend their respective laws to require MLPs to be registered as firms. Exclusions to this obligation should be explicitly listed, and not merely subject to the mode of remuneration of the CPA, as is the case in European Community law.
Option consommateurs also recommends that provincial legislators study the possibility of eliminating policyholder self-reporting requirements, which place a heavy burden on consumers, especially when they are not guided by a certified representative. Finally, it urges them to continue to promote awareness and education activities for insurance consumers. Option consommateurs also makes several recommendations to CPAs.
She asks them to disclose their business links and clearly present the features of the insurance products being compared. Her final recommendations are aimed at consumers. When using such a site, they must be vigilant, and if they decide to purchase an insurance product, they are strongly advised to contact a certified representative. This is the only way they can be sure they're getting the right product for their needs. Failure to take these precautions could have considerable consequences for them. We believe these changes are necessary to ensure the protection of Canadian consumers who store for insurance products online.
