Telling people to use more comparison sites is not a remedy

A comparison of one

A website that compares the products of a single insurer is not a comparison website. It is a brochure with a search box.

That is roughly what the Federal Court found had been happening at Choosi, which offers life, funeral, income protection and health insurance. According to the court’s finding, for four years from mid-2019 the site held itself out as comparing a range of funeral and life insurance policies when all but one of the policies on offer were issued by Hannover Life Re — and every one of them was distributed by Greenstone Financial Services, a company linked to Choosi. The penalty has not been set. An administrative hearing is still to come.

The Australian Securities and Investments Commission, the corporate regulator, has now warned consumers about the sector generally and says it has launched multiple court actions over how sites represent the range of products they cover, and over sites that push several leads that all trace back to one brand.

The advice that gives the game away

ASIC’s consumer message is that comparison sites are a good place to start, but that listings are selected and ordered based on what providers pay, so people should use a range of sites to get a fuller view of the market.

Read that again as an instruction. The consumer is being told to compensate for an undisclosed panel by sampling several undisclosed panels. They have no way of knowing whether the five sites they visit draw on three panels, or one. They cannot tell whether the operator of site four owns the distributor behind site two. They cannot see whether the insurer quoting under two different brand names is the same underwriter. The Choosi finding is the proof: a consumer who did exactly what the regulator now recommends, and visited that site as one of several, would still have come away believing they had surveyed a market when they had surveyed one issuer’s shelf.

Comparing comparison sites is a harder task than comparing insurance policies. It requires knowing corporate ownership chains, underwriting arrangements and commercial placement deals — none of which appear anywhere on the page. Asking households to do it is not consumer protection. It is the transfer of an unsolvable problem.

Lead generation is the product

The second warning in ASIC’s statement matters more than it sounds: sites promoting multiple leads from a single brand, and service agreements under which consumers sign away private data.

That describes the actual business model. A comparison site’s revenue does not come from finding you the cheapest policy. It comes from producing a qualified, consented contact and selling it, sometimes several times over. The quote is the bait; the form is the transaction. Once you understand that, the incentive to show a narrow panel is not a lapse. It is the design. A wide panel dilutes the value of each lead to the payer. A narrow panel with the appearance of width is worth the most of all.

That is why exhortation will not work here and disclosure might. You cannot lecture a site out of a revenue model. You can force it to describe itself accurately at the moment of the sale.

What the label should say

One box, above the results, in a fixed format: the number of product issuers this site can quote; their names; whether the site’s operator is related to any of them or to their distributor; and whether the order of results reflects payment. No prose, no small print at the footer, no separate “how we make money” page that nobody opens. If the answer is “one issuer, related party, paid ordering”, the site can still trade. It just has to say so where the shopper is looking.

The word “compare” should carry that obligation. Sites that will not disclose the panel should not be able to use it in their marketing or their domain.

The case against this argument

The strongest defence of the industry is that these sites genuinely cut search costs. Insurance pricing is opaque, most households never shop it at all, and a paid panel of six insurers is still six more than the zero the average person would have obtained unaided. Nor can a comparison site force an insurer that refuses to supply pricing to appear on it. Demanding whole-of-market coverage would simply destroy the channel and leave consumers with the direct-marketing arms of the big brands, which compare nothing at all.

All true, and none of it is an argument against labelling. Nobody needs to mandate whole-of-market coverage. The complaint is not that panels are commercial; it is that they are invisible while the site claims breadth. A site that discloses a panel of six named insurers and paid ordering is doing something honest and useful. The Choosi conduct the court found was not a narrow panel. It was a narrow panel presented as a market.

Penalties that price the conduct

There is one more thing the case will settle. Four years of distribution revenue accrued while those representations were being made. If the penalty, when it lands, is smaller than what the arrangement earned, it is a licence fee rather than a deterrent — and every operator watching will price it accordingly.