EIOPA: increased significance of the comparison websites; closer attention needed to consumer protection

7 February 2012 — Daniela GHETU
EIOPA: increased significance of the comparison websites; closer attention needed to consumer protection
"Commercial insurance comparison websites have gained increased significance over the past few years. These websites are an increasingly used means of communication or distribution channel that enhance comparability of information for consumers. Therefore, they have helped to stimulate more competition between insurers and intermediaries" says the most recent report released by the European Insurance and Occupational Pensions Authority, "EIOPA's Initial Overview of Key Consumer Trends in the EU".

According to the European authorithy's findings, there are significant differences in the types of comparison websites prevalent on the EU insurance market. Aside from commercial comparison websites, there are a wide variety of non-commercial comparison websites in the EU which are developed and/or run by consumer associations, financial supervisors, independent bodies or professional associations.

Although welcoming the contribution of these sites to insurance products' promoting, EIOPA warns that "significant drawbacks have also been identified with regard to over-reliance by consumers on the price of products, rather than understanding the underlying terms and conditions". In addition, the study conducted the EU Member States, showed that in some cases misleading information may be provided to consumers due to conflicts of interest stemming from close commercial links between insurers and commercial comparison websites. Commercial comparison websites may also not necessarily be suitable for certain types of products such as life insurance, where more information is required than usually obtained through the short set of questions typical on such sites.

EIOPA also found some evidence that "commercial comparison websites are often unaware that they may fall under the scope of existing EU insurance regulation, such as the Insurance Mediation Directive and might have difficulties in adapting to the demands of regulation".
Where appropriate, EIOPA will take action to further analyse and investigate these trends from a European perspective in order to promote safety and soundness of markets and convergence of regulatory practice, states the Report. Future work on consumer trends may include cross-sectoral analysis under the auspices of the Joint Committee of the European Supervisory Authorities (ESAs) - ESMA, EBA and EIOPA - because some consumer trends may cut across financial sectors and the same requirement to collect, analyse and report on consumer trends exists in the empowering legislation of the three ESAs.

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