Australian research business, Rice Warner has this review of Price Comparison Websites (PCWs) in Australia. It highlights the main limitations of price-comparison websites:
- They are usually 'no-advice' yet charge the client the same distribution margin as a full-service adviser
- They offer a limited range, and limited forms of comparison
- They do not offer claims-handling services
On the first point the situation in New Zealand is very much the same - online PCW sales are non-advised, yet typically carry the full cost of an advised product. Many direct sales sites manage to improve on this point by being price leaders.
The point about comparison is largely true, with some exceptions (such as LifeDirect, which uses Quality Product Research data for an enhanced features comparison). Yet the point still holds that the group of products selected means that it is not always obvious to consumers what has been left out, and why. Of course, only the most careful financial advisers are really clear about this too, but at least with a human, you can just ask 'what products don't you sell, and why?' which happens to be a really good question to ask an adviser.
Finally, on claims handling, again this is largely true, with some individual variations. Some sales websites do offer claims assistance, especially those that sell medical insurance. The others are operating on a principle almost opposite to insurance: plan for the best. This is pretty much the same principle on which a lot of non-underwritten cover is sold: as most people don't claim, let's not worry about that. Although non-underwritten cover has its place, if you genuinely believe in planning for the worst, so you can sleep better at night, then underwritten cover is for you.