By Maurice Gertski
ISN'T it wonderful that you can buy anything you like on the internet? From your groceries to holidays, even foreign brides can be sourced on-line. Insurance can also be bought on-line and with the promise of quick results, multi-comparisons and cheap rates it does sound appealing. But you will pay more for your insurance on-line compared to picking up the phone and making a call.
If that goes against the grain of what you think is right then I'd like to spend this paragraph congratulating the marketing people in the various insurance companies and comparison sites for doing such a good job in brain-washing you. The fact is it simply isn't true; the lowest price is available on the phone alone, although the internet has its own very good uses, such as tracking down a beautiful wife who can't speak English and only has one objective in life – to please.
Let me start by explaining why the marketing men have got it wrong and prices are cheaper over the phone. Insurance brokers or underwriters have to establish the risk they are being asked to insure. It could be a home, car, motorcycle, pet or any number of things that need insuring and critical questions need to be answered.
Brokers and insurers who operate online will ask normally a fairly standard range of questions on their website quote engine. These quote engines are supplied by a relatively few companies – CDL, SSP and Open GI are amongst the most popular. On a motorcycle insurance quote they may ask for things like your address, no claims bonus, type of bike, mileage etc. All standard stuff and that's where the problem lies, it is standard stuff.
By their nature, the websites have to capture very specific information and then with the information supplied using a complicated computer programme - designed by a man in an anorak who spends all his time ogling foreign brides for sale on his computer screen - decide a price and make the offer for the visitor to buy.
It means that other information which may help to reduce your quote may never be mentioned. Worse than that, because you are dealing with a computer you cannot negotiate at all. You get a set rate that is worked out on the information you supplied in answer to the set questions.
On-line rates are referred to as 'screen rates' in the industry. They tend to be the cost from the underwriter and depending on how aggressive the broker or insurer is the cost could be without any profit margin or even at a loss if it is trying to grow its book of business. That sounds as though it may be advantageous to the buyer but often you can still beat the price by calling on the phone.
The other area that has grown in popularity recently is the price comparison websites that have sprung up over the last couple of years. Effectively these bring all the brokers and underwriters into the same arena and ask them to slog it out for your business. It's a great idea and some experts reckon these sites now sell more than half of all car and motorcycle insurance in the UK. I wouldn't argue with that – the brain-washing has been very effective.
The same rules apply though. The companies competing are all running from standard data, using the same quote engine providers and giving their best price as a result. Sometimes working out the excess due, whether legal cover is included etc can be quite difficult on these sites so be wary, the cheapest is not always the best or most appropriate for you. Coming to think of it, the cheapest foreign bride may not be the best or most appropriate option for you either. There has been some criticism that these price comparison sites are misleading on the products these sell but I think recently they have all got a lot better.
The simple fact is that even on the price comparison site you are still receiving a screen rate. That's a bit like paying the asking price in a new car or motorcycle showroom without haggling, you just wouldn't do it...unless of course the marketing men had you convinced it really was the cheapest, but if you have read this far and still think that's the truth I'd advise you going back to searching for a wife on line without wasting any more time reading this.
Where the internet and price comparison sites do win is in the homework stakes. I personally would advocate using a price comparison site to benchmark prices in the market for my car or motorcycle insurance. It will give me a target price to beat when I pick up the phone and speak to a broker to actually buy my insurance. It is critical to do this homework for when you call the broker to do a deal; otherwise you really are only guessing what the current market price is.
Armed with the benchmark price you need to beat you now need to select a broker or two that you are going to call. This is important homework as well. I'd suggest you go with a broker you know or trust – a big brand name perhaps. Certainly, it is worthwhile having a back-up and giving the smaller or local broker a chance as well.
When you speak with the broker on the phone they will inevitably ask you most of the same questions as you have just filled in on-line but the crucial difference is that you can talk with them and expand on various points. If they are good at their jobs they will pick up on this and using the motorcycle insurance analogy it is easy to explain: I want motorcycle insurance but have zero no claims bonus. Normally that will mean a high premium and that's what you're likely to get online or on a price comparison site. However, speaking with a real person you can tell them that while you have no bonus, it is because you haven't owned a bike for two years but prior to that you had a full bonus. A good broker will use that information to lower your premium or perhaps even use a delegated scheme (a scheme where they can alter the screen rate price to match customer needs based on additional information or profile) to suggest a lower price.
Bingo, lower price achieved, job done, more time for researching potential foreign ladies on the internet!
The point is that you cannot have that sort of dialogue on-line with a computer programme. Once you have gone through the process with the broker, they will know your cheapest price and decide whether they want to compete for your business. It may take one or two calls before you find a broker willing to beat the cheapest quote you got on-line but find one you most likely will, providing you have told the truth and selected the brokers you are calling with care.
A word of warning though, your insurance quote may not always go down, particularly in current market conditions (April 2009, economic melt down). Generally the big insurers had a lot of money tied up in investments and we all know they have headed south recently. That puts more of an emphasis on them to make the money from the underwriting business so prices could well go up. Even so, the phone not internet model will still find you the cheapest price. But don't forget to use the internet to do your homework; it is a valuable tool for benchmarking prices.
As a parting shot, if you are bone idle lazy or have more money that you could ever possibly spend, the internet only option is a potentially good one as you may not mind spending a bit more money on your insurance. That will also give you plenty of time for leisurely browsing the foreign babes network for your first ever wife/girlfriend; just make sure your anorak is nice and clean when you send the photos.
Maurice Gertski is an expert in motorcycle insurance and is dedicated to helping people lower their insurance premiums. Call Westhill Insurance to speak to specialists in motorbike insurance.