Consumers warned about guerilla marketing

Consumers have been warned to be wary of ‘guerilla marketing’ by price comparison websites.

Online travel extras company essentialtravel.co.uk says customers do not realise that many price comparison websites are owned by one company but operate under several trading names.

“Companies on these so called ‘money saving’ websites are operating under several trading names, so whilst a top 10 search gives consumers the impression that they are viewing a range of prices from 10 different providers, in reality the 10 insurance “brands” on display are actually owned by a small pool of three or four companies,” said Stuart Bensusan.

“In some cases it’s as few as two separate providers. Where’s the comparison in that?”

According to essentialtravel.co.uk, a quick search for the cheapest travel insurance policies on Go-Compare reveals its top 10 policies are supplied by just two different companies and CompareTheMarket shows only three.

“This means if consumers were to purchase a policy from inside the top 10 results on Go-Compare there is an 80% chance that they will have purchased a policy from the insurance provider Drakefield, and a 20% chance they would have purchased a policy supplied by Citybond insurance,” said the company’s report.

“On CompareTheMarket.com there is a 60% chance of purchasing a Rock Insurance policy and a 30% chance of purchasing a Blue Insurance policy.”
It also warned customers of the possible flip side of buying cheap insurance.

“Insurers can only offer the exorbitantly low prices appearing on these sites by levying extremely high excesses on policies,” said Bensusan.

“Consumers aren’t always aware of the level of cover afforded by these cheaper policies; for example, whilst Moneysupermarket.com offers the lowest priced policy at £27, it has the highest excess at £300.

“A review of our recent claims showed 70% of them were for amounts totaling less than £300, which means that had those customers purchased this particular low cost policy they would have had to stump up the entire cost of the claim themselves.

“By spending just £28.35 more on their annual travel insurance policy, customers can reduce the excess to zero on items such as baggage, where claims tend to be for lower amounts.”

By Bev Fearis