The Insurance Council of Australia (ICA) has flatly rejected today’s call by influential senator Nick Xenophon for a government-run comparison website for home and car insurance.

It says comparators can lead consumers to choose the cheapest cover without taking into account their fitness for purpose.

“Comparison websites focus on price,” ICA spokesman Campbell Fuller told insuranceNEWS.com.au.

“They tend to oversimplify product information and do not help customers to choose the most appropriate product for their individual needs.

“This may be detrimental to many consumers.”

Insurance comparator websites have had a major impact on the UK personal lines market, and leading Australian insurers have strongly resisted participating in local comparators, insisting they lead to consumers making decisions based purely on price. 

Mr Fuller says comparison website users risk “defaulting to the cheapest policy and inadvertently finding they are not covered for a risk when they make a claim”.

He says the North Queensland Home Insurance website, established last year in March by the Australian Securities and Investments Commission (ASIC), shows the limitations of such comparators.

“Though the Federal Government instructed ASIC to establish a government-mandated comparison website for home and contents insurance in north Queensland, the site has had negligible use and demonstrates only that competition in the market is strong.”

It is more productive to improve the disclosure regime, to help consumers make informed choices, Mr Fuller says.

“ICA is working to develop a more effective disclosure regime that will communicate clearly and efficiently with consumers where and when they need the information to make better decisions.”