Australia’s general insurance duopoly – Insurance Australia Group and Suncorp – are continuing to stifle competition in the local car insurance market by refusing to list details about their products on comparison websites.

Online comparison sites triggered a consumer revolution in the United Kingdom when they were launched a decade ago and now account for more than half of the policyholders switching car insurance policies each year.

According to international market research firm GfK, comparison sites now account for 22 per cent of all car insurance policies sold in Britain.

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It’s a different story in Australia.

The market share of comparison sites is relatively small – less than five per cent – because IAG and Suncorp won’t allow online distributors such as Mozo, Compare The Market and compareinsurance.com.au to include their products on comparison tables.

IAG and Suncorp account for 70 per cent of all car policies sold in Australia through big brands such as AAMI, NRMA, RACV, GIO, SGIO and RAA.

As a result, they reap the fattest profit margins in the global car insurance business of around 15 per cent.

UK insurers operate on margins less than half that because they were forced to lower premiums after comparison sites highlighted better deals and features available from smaller providers.

Profit margins “the envy of the world”

Matt McCann, the chief executive of comparethemarket.com.au, believes IAG and Suncorp won’t list their products on comparison sites because they fear customers will abandon them in numbers similar to the UK.

IAG and Suncorp account for 70 per cent of all car policies sold in Australia. Photo: AAP

“The two largest insurance groups have margins that would be the envy of insurers not only in the UK but most other parts of the developed world,” he said.

“My sense is that they’re responding to what happened in the UK which has delivered big benefits to consumers.

“Some of the Australian insurers have taken a view it’s not a process they want to be involved in.”

Compare The Market is a big player in UK online insurance and launched in Australia three years ago.

It is owned by BGL Group, which also owns Auto & General that underwrites many of the insurance brands marketed on its site such as Australia Post and Virgin Car Insurance.

Consumer advocacy body CHOICE has questioned the comparethemarket.com.au site because it markets many insurance products underwritten by its sister company.

“We believe sites should compare as much of the market as possible and not just the insurers that give financial incentives to be listed,” said CHOICE spokesman Tom Godfrey.

Mr McCann insists that the company has made a big effort to widen the product range offered on the site, but says IAG and Suncorp refuse to play ball.

“We invite them to participate every six months,” he said.

Big insurers getting nasty

There’s probably little chance of the duopoly exposing their products to such scrutiny any time soon – in fact they seem to be playing nasty with the online players.

Another comparison website – compareinsurance.com.au – told The New Daily that IAG and Suncorp had sent legal letters to the company after some of their customers posted reviews of the two insurers’ products.

IAG and Suncorp demanded that their brand logos be removed from the customer review section.

Compare Insurance director Natalie Ball said the company complied with the request to take down the logos, but continues to publish customers’ reviews.

“The large insurers affirmed their stance to not listing on comparison sites when we received trademark related legal letters,” she said.

“We removed their logo and tried to use this communication to further negotiate partnering with us, however to date there is no change.”

A screenshot from compareinsurance.com.au of car insurers minus their logos.

Ms Ball suggested that the big insurers might be spooked.

“The largest insurers in Australia are in a very comfortable position in terms of their market share,” she said.

“We can only assume that allowing consumers to compare the price, features and benefits of products in a simple and transparent manner may show them in a less favourable light.”

CHOICE calls on insurers to disclose pricing

CHOICE is demanding the big insurers cough up information on their car and home insurance products in the same way that banks disclose details about pricing and features for home loans to market research sites.

“Comparison sites such as CHOICE compare insurers based on the policy features and a sample of quotes but we do not have access to the insurers live pricing for risk based products such as car and home insurance,” said Mr Godfrey.

“We believe insurers should provide a pricing feed to comparison sites if they present the prices in the context of comparable policy features and they are impartial.”

Mr Godfrey also said it was important that comparison sites disclosed any income they received from insurers.

“One of the problems with some popular comparison sites is that they only include insurers that pay them several hundred dollars per policy,” he said.