20
Examination of witnesses
Mark Bailie, Steve Dukes and Peter Duffy.
Q82 The Chair: Welcome to today’s meeting, which is the seventh oral evidence session in the committee’s inquiry into the regulation of the consumer insurance market. Thank you, Mr Bailie, Mr Duffy and Mr Dukes, for attending. I will kick off by asking Mr Dukes to give us the scale of the market that is involved here, how that has grown over the years and how competitive it is. Give us a picture of the price comparison part, which clearly has seized a very large share of the insurance market.
Steve Dukes: It is important to start with the market as a whole. The majority of consumers will buy their personal lines insurance for this coming year by renewing with their existing insurer. Roughly 60% of consumers in car insurance and over 70% in home insurance will buy their insurance this year by renewing. That is a large section of the market.
For those who switch—which is the balance of 40% in car and 30% in home—about 80% of those are typically bought through comparison. That percentage—about 30% of all policies if you take those two together—has increased by one or two percentage points over the past few years. The reason for that is the model of using comparison businesses to compare choice on behalf of consumers—but also to attract consumers if you are an insurance provider—has been quite effective and more widely adopted by people over the years.
Mark Bailie: Imperial shared its study post GIPP with the committee. Conclusion 5 of its work basically said for those customers who do not switch they consistently pay 20% more for their insurance. As Mr Dukes pointed out, the vast majority of customers do not switch and are paying about 20% more for their insurance. The FCA in its own review of GIPP said the single biggest driver of consumer protection is search and switch. Inertia is the primary driver of customer detriment.
Peter Duffy: Consumers find comparison environments simple, easy, information rich and free to use. That is part of why they have been so successful over the last few years.
The Chair: Where are your aspirations in terms of your market share over the next three to five years?
Peter Duffy: In terms of the percentage of consumers using comparison environments, Steve gave 80% and our numbers would say it is probably greater for motor, less for home. That is an average between the two; we agree with that number but it is an average between the two. That will be broadly static now. These are very well penetrated markets. Consumers know these brands, they know what they do, and they trust these brands. I do not see that there will be fundamental growth in the consumer using them more unless things such as fundamental changes to auto renewals begin to come into the market and consumers are encouraged more fundamentally to switch, which is, as Mark says, the best way they can save money.
The Chair: You advertise widely and you have very strong brands; clearly, that attracts people to come in. Is the main dynamic of the market in price?
Peter Duffy: No. No doubt we will unpack this a little more as we go through additional questions, but if you take something like car insurance, the consumer gives us 49 variables—49 pieces of data about themselves. For home insurance it is 61. Essentially, we then go and scan the market. We have more than 200 car insurance policies. We have more than 100 home insurance policies. We come back and we provide them with a list of products that meet their demands and needs. In the case of car insurance, we deliver about nine variables, including the price and cover—what is the policy including—and that is 10 for home insurance. We give a quite summarised but rich dataset that enables the customer to then go and begin to sort, compare and understand what the right product is for them. That is how the journey begins.
The Chair: Is that on the front page?
Peter Duffy: Once you complete that dataset, we then return that for you. We structure that by price, let me be clear, so that is structured cheapest first and that then comes down by price. The consumer then has the opportunity to begin to filter those. We have nine filters for motor insurance and 12 filters for home insurance. They can sort and, importantly, they can then begin to compare products. They can have half a dozen products running alongside each other where they can then look at the different components of that product and understand what the right thing for them is.
When they are concluding that a product may be right for them, something that happens in MONY Group is that we open what is called a drawer from the side of the site, and that then has a deeper summary of that product to make sure that the consumer really understands all the characteristics. That is being enhanced all the time.
We have launched something called Policy Inspector—that is our term, not the consumer’s term—that essentially is an AI-driven freeform text where you can ask any question about that policy: “It has European driving cover but does it enable you to drive in Albania?”, for example. These services are getting richer and richer in terms of helping customers in a really simplified way, at the time they want to execute the transaction, and get the right data for them to make sure that they are informed.
Mark Bailie: I agree with what Peter said and I think that we all offer a pretty similar depth of service. Fundamentally, we sell a promise, and the one bit of data that we have been asking for since October 2022 when we collectively met the FCA—we asked again in 2024 and we went out unilaterally in 2025—is claims data. We want standardised definitions and we want standardised disclosure because we are selling a promise and we cannot close the circle.
The Chair: That is a very good point that we will want to follow up.
Q83 Lord Sharkey: I will declare an interest before I start: I have a family member who works for MaPS. I want to ask about revenue. How do you generate revenue? How do you manage any conflicts of interest that might arise with that? How do you disclose, if you disclose, where you get your money from?
Mark Bailie: Our revenue is very simple. We are paid only for completed policies. For the year that ended in June 2025 we did 42 million quotes and sold about 10 million polices. We got paid only for the 10 million policies. We are, in general, paid a fixed fee, which is negotiated by product line, by insurer—clearly, we touch on CMA issues talking in any more detail than that here. The one exception in general insurance and the subject of the committee is travel insurance, where it is a percentage commission-based model. In October 2024 we decided that we were being over-remunerated for more difficult cases—medical conditions, older customers—and we voluntarily capped our commission at £200 and returned the entire excess to the customer as a premium reduction.
Peter Duffy: MONY Group is a listed plc company so all this data is available in the public market. Last year we took £445 million in revenue. Essentially, 50% of that was from general insurance, 25% of that was from money products, and 25% of that was from energy, broadband, and our cashback businesses. You may know that we operate under three brands in the UK: MoneySuperMarket, Martin Lewis’s MoneySavingExpert, and Quidco. We also provide comparison services for 34 other brands in the UK, 15 of which are general insurance, so we provide the service into Which?, Auto Trader, and Blue Light Card.
The remuneration structure is exactly the same as Mark describes. It is important for the committee to understand that we are not incentivised for the consumer to choose one product over another. The skinny version or the full-fat version of a product, there is no difference in commission coming through to the aggregator. It is our job to make sure that we meet demands and needs for the consumer and they get the right thing for them.
Mark Bailie: On the conflict of interest, the value of our businesses collectively is not driven by one transaction. It is driven by repeat, long-term relationships with our customers and we will walk away from any transaction if it is not in the interest of our customers. Our customers always come first.
Peter Duffy: On the point of conflict of interest, our interest is entirely aligned with that of the consumer. It is a free service for the consumer; we need to get them the best deal.
Steve Dukes: We have the same business model that has been described there so I will not repeat that. The only thing I will add is that it is important that the economic incentives of these business models are aligned to consumers. It is a cost-effective way for insurance providers to acquire new customers in what would otherwise be a very difficult thing for consumers to choose between as it is a very personalised product. As a result, it creates competition for consumers, it makes it easier for new entrants to enter the market, and it keeps insurance providers’ costs down, which comes back to value to consumers.
That is the model—that is the factual answer, what you have heard—but the important point is that it is aligned to good consumer outcomes. As you have already heard, we do not see that as a single transaction or a moment in time. We see that as something that needs to be sustainable for insurance providers but also for consumers year after year. That is where our focus is.
Lord Sharkey: Are these various commissions and fees disclosed to customers?
Mark Bailie: The way we are remunerated is disclosed on the website and—
Lord Sharkey: Presumably, it says you have some commissions and some fees, but does it say how much?
Mark Bailie: I can get someone behind me to pull up the exact wording. The tab is “How we get paid” or “How we get remunerated” and it explains that we get a fixed fee for a closed transaction, paid for by the insurer.
Lord Sharkey: Is this a well-visited tab? Do you know how many people actually look at this?
Mark Bailie: I could not answer that question today but I could go and find out. We monitor the site; I am sure we could give you that information.
Lord Sharkey: That is an important question, and perhaps an important question for the industry, given the mess that motor car finance found itself in around improper disclosure.
Mark Bailie: It is a fair question you are asking. The issue on motor car finance and the examples quoted was £3,000 commission on a £4,000 car. In FY 2025 our revenue from insurance in total was about £420 million, and we sold gross written premium of about £3.7 billion, which is about 11% of the premium. I do not think that motor finance is anywhere near what we are talking about.
Lord Sharkey: We are talking about the principle, not the amount, and the principle surely is that the consumer must find it easy to see what is being charged.
Mark Bailie: I think that they do.
Peter Duffy: The customer is not being charged anything. This is a marketing cost for the provider and the price should be the same on its website as it is on our website. There should not be a cost coming through for the consumer as the result of using a comparison.
Lord Sharkey: Is that the case?
Peter Duffy: I believe so.
Lord Sharkey: Do you know so?
Peter Duffy: The terms and conditions say it has to be, in terms of a relationship with the provider.
Mark Bailie: The contractual relationship with a provider is it has to price the same on its site as it prices on ours.
Lord Sharkey: So it becomes its problem?
Mark Bailie: Whether they comply all the time, I will not commit myself in public, but we can test it for you.
Lord Sharkey: I am very interested in knowing how many people actually access this information on your site before they make a decision.
Peter Duffy: It may be helpful for the committee to understand why providers use comparison environments. We are the cheapest way for them to acquire customers. As Mark has described, they make a payment only when the customer decides to join their organisation to buy their product. The alternative to that is they have to spend on expensive third-party media on brand advertising, on Google pay-per-click, and they are essentially paying for customers that they never write the business for. That is why they like comparison environments, because it is a relatively cost-effective way for them to begin to get customers to join them if their products are sufficiently attractive.
Lord Vaux of Harrowden: To probe the conflict of interest point a tiny bit more, are the fees charged the same to each provider or are there different fee levels for different providers? If so, what impact does that have on your ranking? There is clearly a conflict if provider A is paying 1% and provider B is paying 2%. There is clearly a conflict of interest there. I do not think that is mentioned anywhere on your website.
Mark Bailie: That is an easy question, and I understand why it is a concern. There are individual fees negotiated with every provider. I think that it would be an odd situation under competition law if we said it was a fixed fee to every provider regardless. Everything is negotiated. The fee we get makes absolutely no difference to the ranking.
Lord Vaux of Harrowden: You do not have sponsored rankings?
Mark Bailie: We have absolutely no sponsored rankings on our site.
Lord Vaux of Harrowden: Is that the case for all three?
Steve Dukes: It is the case for us, yes.
Lord Davies of Brixton: You do have partners? You choose who you partner with, excluding the people that do not appear on your list?
Mark Bailie: After Direct Line joined the panel, which was its choice—and it was the last major insurer in the country to join—every insurer is on our site.
Lord Davies of Brixton: Apart from specialist brokers?
Mark Bailie: Specialist brokers are not underwriters in that sense, but our job is to get every insurer on the site. The business was formed in 2004. It took us 18 years to persuade Aviva to come on and 20 years to persuade Direct Line to join.
Lord Davies of Brixton: Sorry, I am jumping out of turn, but it is not in your interest to choose partners—you want everyone to be a part of that?
Mark Bailie: No, I want everyone.
Peter Duffy: Everybody on the platform.
Mark Bailie: I referenced this 20% saving by searching and switching. The loyalty penalty caused by inertia is not because your current insurer is putting up the price. Insurers—like banks do in any traded market—are constantly trying to balance the book of risk, and sometimes they have more of one risk than another. As a result, they charge more for those risks and charge less for the things they need to rebalance the book.
That constant shifting of the risk profile of insurers means that even our very best insurers—and I will not name them for competition reasons but people know who the best insurers in the country are—are rarely the cheapest price more than 15% of the time. The savings that are generated by searching and switching are a function of the insurers constantly trying to rebalance their books and creating opportunities. The chance that whoever you bought your insurance from last year having the keenest appetite for your risk 24 hours later is small. The chance of it having the keenest appetite for your risk a year later is very small. That is why customers who search typically save 20% and it is why inertia, as Steve said, is the biggest proportion of where the customer detriment is coming from.
Peter Duffy: Could I shine a spotlight on this? It is such an important point. For transparency, MONY Group has one advertised slot that people can buy into but it is clearly marked and it looks very different from everything else. I do not want the conversation to move on without me declaring that we have one advertising slot that advertisers can buy into.
We describe this as a two-sided marketplace. What that means is when consumers come to the comparison environment there are 200 products out there vying for their business. Someone somewhere wants your business and it is that competition that essentially generates a saving. I think that is inherent in what Mark is saying. That is how these products and services work; that is why they make such a difference for consumers.
Mark Bailie: It is why we want every single insurer we can on the panel. The more insurers there are, the more competition there is and the better the outcomes for consumers.
Q84 Lord Turnbull: I am afraid I am finding the explanation that I was one risk one year and my risk profile had changed the next year, and that is what is causing the change in the price of my premium, too clever by half. I have five or six insurance products. Happily, I have not had to make a claim on any of them in the last four years, but there is something that happens year after year, which is that I get a renewal notice. Typically, it has gone up by 20%. Nothing about me has changed. My income as a pensioner has gone up about 4%. I get on to the phone to them and I haggle with them. Eventually, they say, “All right, we will make it 10%”. I thought that there was something some time ago that existing customers who are renewing customers should get the same offer as is being offered to new customers. As a customer it does not look like that to me. It looks as though there is a quite deliberate attempt to exploit inertia, which I resist but many people do not resist, leading to the finding that people who do not switch pay 20%. Are insurers not following the principle that renewing customers should get the same quality of offer as existing?
Mark Bailie: I believe you are seeing the insurers next week. How they comply with GIPP I will not answer for them. I can understand the concern you are raising. It is a subtly different point, which is your insurer’s appetite for your risk is as much about them as it is about you. You do not have to change but your insurer and its demand for risk changes. It is a very dynamic position the underwriting is in. At the same time, there are 199 other insurers that look at you, who never makes a claim, want to grow, and think, “I want that business and I will bid lower”. They may bid at a lower price for all their renewing customers and all their new customers to get more customers like you. That is what drives the 20% saving.
I know this sounds self-serving and it is not meant to be. Please go and use one of our sites and actually see the level of savings, because if you have been negotiating directly with your insurer I promise you, you are almost certainly paying far too much for your insurance. It is a 10-minute journey.
Lord Turnbull: I still find difficulty with this term “price comparison website”. It seems to me a misnomer of what you are actually doing and what you should be doing, which is weaning people away from price as being the big indicator.
Mark Bailie: I completely agree with you. That is why we are so determined to get our hands on claims data. In the end the two most important things are how much you will pay for it—and in a cost of living crisis this matters a lot to most households in the country—and whether the promise will be stood by. Collectively and individually, we have been pushing for four years now to get standardised claims data. Please help us get standardised claims data and we will close the circle.
Peter Duffy: That is, I would guess, the substantive point from us all. We have not spoken in advance but that is certainly my point.
Can I bring something else out, which is the conversation about hollowing out? I was listening in to the last session and read some of the evidence that has been given in previous sessions. I think that the committee has already heard that there is a bronze, silver, gold structure starting to emerge in the general lines insurance industry. It is known as essential, standard and premium. If I look at what MoneySuperMarket sells, essentially we are selling as many premium products as we are essentials products. We are selling twice the number of standard products that we are selling essentials products. While we do structure that price first, consumers are not going for the cheapest, so please do not let this idea that all people want to do is to strip features away and buy the cheapest. That is not what is happening in practice.
If we look at where providers come in the ranking, 70% of customers on home insurance are not buying the number one thing that we suggest to them. They are filtering, they are exploring, and they are checking that out. We ask you 61 questions. We go through significant data interrogation, and we are only delivering solutions to you that are meeting your demands and needs. That number one is quite often a good product and the right product for you, so just because they are not choosing that you should not overread that as the problem. This idea that the market is being hollowed out because the customer has information and can compare things in a very direct way should be investigated more thoroughly.
Q85 Lord Hill of Oareford: Please unpack a bit more what needs to change if you get the data that you want on standardised claims. What needs to happen? One of you—we do not need three versions.
Steve Dukes: We request claims data—I would imagine everyone here does—of our insurance providers. Some will provide it and some will not. In order to create a proper comparison and give the customer the full picture of what they are buying, we need to have standard definitions of the time to process a claim and whether it has been successful or not. There are a number of key things that need to be standardised so we can put it to use for the customer and they can see the full picture. They already see a very full picture. They do not just see price, they see a number of key features. There are lots of ways they can compare them with their own demands and needs. Claims is the missing bit of data that is important to consumers.
I hope that as an industry we can get there together. There is an FCA working group that we are taking part in. I think that we can get there as an industry, but if that is not the case then these things sometimes can come around through an intervention. We will try to solve it through industry but, as Mark pointed out earlier, it has taken some time and it would be good to accelerate.
Lord Hill of Oareford: The measure that you would need if you cannot get there is what—-the FCA to introduce a requirement?
Mark Bailie: There are three things we want as a minimum: key-to-key date, which is the date you lodge to the date you are paid. We want average and median on those. We want the number of customer inquiries that are agreed to be a claim, because we think that is quite a big variance in the disclosure that led to the super-complaint. We want what percentage of those claims were paid.
Lord Hill of Oareford: That is helpful, but what do you need to change if it cannot be delivered voluntarily? Do you need the FCA to instruct? Is that what you are saying?
Peter Duffy: What we are trying to do here is unpack what we mean by quality. Quality can be product features, yes, but quality has to then be a delivery against those product features. This is not our area—we are distributors, we are not manufacturers—but it is an area that the committee may want to begin to investigate. If you take travel insurance and it says, “We will fly you home” but the reality of the experience is they try to get you treated by a local doctor before they fly you home, that would essentially create a view of whether that product has fulfilled its requirements in the consumer’s mind, yes or no. If you take buildings cover and it says, “We cover you for storm damage”, but the insurer says, “Some of that damage pre-dated the storm and therefore we are adapting the claim as a result of that”.
The issue is every claim is very individual. The rights and wrongs of it are hard for anybody to comment on whether that was the right thing. Product by product, if we could understand how many claims are paying out and if we could understand in some structured format why those claims are not paying out in a comparable way so that consumers can take a view about the delivery of those features—are they getting the things that they think they are buying?—it would be very helpful. We would get that on our websites on day one. Consumers would be celebrating if that information was available.
Lord Hill of Oareford: What does the industry say as to why this is difficult? Is this to do with their competitive model or is it because it is very hard to standardise because each case is different?
Mark Bailie: The standardisation of definitions is the big problem. You see it in the data that led to the Which? super-complaint. That data was provided by the FCA. Our product governance investigated them all. For one of the major outliers, I personally spoke to the CEO and it is a definitional problem with how they define a claim. We have written to all the insurers three times and met them four or five times over the last 12 months to try to get this agreed. As we sit today, four in 10 have agreed to the definitions we have suggested. One in 10 has refused point blank, and five in 10 are stuck on agreeing a definition.
At some point, reality and ambition combined and we put our hands up and say we are trying to drive the market to this; we are trying to get consensus. When you speak to the CEOs of the insurers, who are bound by consumer duty, who are grown-up, sensible people, they agree that this needs to be done. How we break this definitional impasse is a difficult technical problem, but fundamentally they are providing a promise, we are selling a promise; we have to be able to demonstrate to consumers whether that promise was stood behind.
Peter Duffy: Perhaps the committee can see why we think that is best facilitated by the FCA.
The Chair: You have made your point well.
Q86 Lord Griffiths of Fforestfach: I am not sure I understand what is going on. Let us assume I come to your website and I have to fill out a form, which may be 50 questions or something like that. Some of those will directly affect cost; others will affect quality. When I get something back from you as a recommendation, what would that recommendation contain in relation to cost and quality?
Peter Duffy: I have it in front of me. If I take home insurance, for example, we have buildings cover and accidental damage, contents cover and accidental damage, legal cover, home emergency, what the voluntary excess is, what the compulsory excess is for both buildings and contents, and we have the price. Then we have a de facto score as well and I think the committee has had information about what de facto is and is not. Essentially, we deliver these 10 data points including the price and then that is stacked against other companies that are essentially bidding for your business. Then you can look at those features in a very comparative way and you can look at the price at the same time.
Lord Griffiths of Fforestfach: You make a judgment or you tell people, “If you want to make a judgment, these are the issues. You have to decide for yourself”. Some insurance companies seem to have a reputation for being much better than other insurance companies. How do you bring that into your assessment?
Mark Bailie: In the end, because “some are better than others” is a qualitative score, because we are running non-advised journeys—we are presenting you with information to allow you to make a decision—it is very difficult to bring those qualitative scores in, which is why we keep coming back to: the thing that would really complete the quality circle is understanding what the claims performance of these insurers is. The insurers agree broadly, because most of the big, good insurers have pretty good claims performance and they want to publicise it. We are not providing a recommendation in the sense I think that you are trying to draw out. It is for you to make the decision.
Peter Duffy: Others do try to do that. We provide a service for Which?, for example. Which? gets in contact with people who have made claims. If it has over 40 responses, it will then share that data with the consumer in that service. The committee can make a judgment about how helpful that is to the consumer one way or the other. Reputation is quite a complicated thing. What Mark, Steve and I are saying is that we would really like some regulated, approved data that is all about performance. That is the thing that is lacking, rather than something that is subjective.
Lord Griffiths of Fforestfach: Finally, in your particular area of the business, of price comparison websites, what percentage of the market would the largest four or five companies have?
Mark Bailie: Of the comparison business?
Lord Griffiths of Fforestfach: Yes.
Mark Bailie: I will have to do the mental maths.
Peter Duffy: My answer is I have no idea. That is not how the marketplace works. We have 120 businesses and 200 products on the platform. They are all on the platform because they get good value. Who is getting the most? That is not something that we really conduct massive analysis on. I would have to go and have a look. It is not a front-of-mind number for me. I just want to get you the best deal, and I do not care who does it as long as it is a decent company that has gone through fair valuing.
Lord Griffiths of Fforestfach: What you are saying is that it is a highly competitive business?
Peter Duffy: It is a highly competitive market and it is getting more competitive and more complex. There was a question over here about what we have seen since GIPP. We have seen a 60% increase on the platform in the number of products for home and motor insurance since then. I observe that those products are getting more sophisticated: the bronze, silver, gold, but we are also seeing dynamic pricing beginning to arrive. Like an airline, an insurance policy can get more expensive now as it gets closer to the renewal date, and then insurers will dynamically begin to change the price based on the customers they are trying to attract at a point in time.
You can see prices on there that only last for a limited period, and that is beginning to pick up steam. The days of someone thinking, “There are one, two, three insurance companies I may go to and I will get a good deal, perhaps I will call them up”—consumers are not going to get a good deal unless they use a service such as ours because the market is so competitive and it is so sophisticated.
Q87 Lord Davies of Brixton: Peter stressed the extent to which people have options when they interact with all your websites, and I am sure it is all the same. Because it is online, you know all this data—you know what people do on all your websites. You see how many times they click and how often they choose particular options. To appear a bit discursive—bear with me—I recently became an expert on tumble dryers. The thing about that sort of domestic equipment is they come with ever more options but in practice people only choose one. That is such a feature now that there are statutory regulations that tumble dryers have to have a particular default option, which is the eco option.
Switching very swiftly to what you do: do regulations require a default option? Is it needed? Could it be required that there should be a default option on your websites? If it were under regulations, it would match across your three different companies.
Mark Bailie: Personally, I think that the question about how competitive the UK is and the very good customer outcomes you get by searching and switching—I have a business in France; as a wider group, we run insurance companies in South Africa and Australia; I was in the US a couple of weeks ago—when you go to these other markets you realise how sophisticated the UK market is. Nowhere in the world is like the UK. It is an accident of history from being the centre of private equity and the centre of the insurance market back in the early 1990s.
However, this market is so vibrant and so effective at accurately giving you the product you want, I am very concerned about point-specific regulations. The outcome of GIPP, as we all know, was a more sophisticated, more dynamic market that came out of the back of it, versus consumer duty, principles-based, “Are you doing the right thing?”. I worry a lot about that—even to me, things like that sound compelling, but they have such a distortive effect. I think that we all naturally take for granted how sophisticated and effective the UK market is, and therefore we risk damaging something that actually delivers incredible customer outcomes.
Peter Duffy: I wholeheartedly endorse that. I travel internationally a lot. We in the UK are looked at as an example of where the market works really efficiently for the consumer. Actually, many providers and other markets would not want their markets to work like it does here, because the consumer is so empowered. It may not be a fashionable idea, but this market is quite efficient and is working quite well.
It would be really beneficial if we could have this performance data on how the policies work, on top. That would be an enormous step forward. I think that it self-regulates, essentially, because putting customers through consumer duty-led processes, every provider on the platform has had to go through fair value. The journeys we go through are looked at by the FCA. We are constantly looking to improve and to make sure that under our consumer duty, people understand and are empowered to make the decision they need to make when they get to the end of our journey. It is working really well. My sense is that is not required. There is not that big a gap.
Steve Dukes: Market forces are making those default options present anyway. What we see is if there is a poorly featured policy relative to its alternatives, it does not last very long. Even if it did make it to be a choice for the consumer, customers would not be choosing it. We talked about essentials products and bronze products. You might be surprised how much cover they actually have in there. They might have less medical cover in the case of travel insurance. They might have less coverage, lower limits, but the key things are still covered. These products, in effect, do have these default features in them, but it is an efficient market that is making that happen right now. I do not think that we need to mandate the eco setting, because I think the eco setting is there already.
Q88 Lord Vaux of Harrowden: I have two questions. First of all, Mr Bailie, you mentioned that what you are selling is a promise, yet you do not know whether that promise will be met as it stands because you do not have the claims information. I am pleased to hear that you are working on trying to make sure that you have that, but if you do not know whether that promise will be met, how can you actually meet your consumer duty as it stands?
My second question is not totally unrelated. One of the biggest problems that causes claims to not be met is actually a misunderstanding by the customer of what the policy does and does not cover. What is your role in improving that situation?
Mark Bailie: I am happy to take both of those. On consumer duty and how we assess things, we have an obligation to ensure that the products we sell are fair value, and therefore our product governance runs monthly, assesses all our providers and runs off a whole variety of data. One of the key bits of data we have is complaints we receive, and those can come through two routes, either direct to us or via the insurers that come back to us. To give you a scale of the complaints we receive, in the last year we have done 5 million home quotes and received 74 complaints, and 10 million travel quotes and received 29 complaints. Every single one of those complaints was investigated. That led to—
Lord Vaux of Harrowden: You get all the complaints that go to the underlying insurer?
Mark Bailie: No, we do not, but we ask them consistently whether they are getting complaints about these products as part of our quarterly assessment and process of assessing them. We receive every year, from every insurer, for every product, an attestation that they have complied with consumer duty to give us read-0through that that is being done.
To give you a feel for where that complaints data goes, in 2024-25—we have a June year end—there were 19 interventions and 14 suspensions; in 2025-26, there were 28 interventions and three suspensions. To give you an example—
Lord Vaux of Harrowden: Suspensions from the panel?
Mark Bailie: We took them off the panel. An example of things we have suspended companies for is we got a complaint from a customer saying they had disclosed that they did not have window locks, and then they received a policy that said there is an exclusion on your policy that if you are burgled and you do not have window locks, you are not covered. Clearly, they had made the disclosure and were not covered. We mapped back through our systems, and we found that the customer had made that, because everything is audited and recorded. We went back to the insurer and said, “Why have you done this exclusion?” It went and investigated and found it had mismapped the data in its own systems, so it had failed to pick up the disclosure. It then had to go back and remediate another 56 customers where it had done the same thing, where the customer had not noticed it.
We pass over the customer at the end of the quote but we regard our obligation to customers as being until the end of the policy, and if something goes wrong and your insurer does not perform in a reasonable way, and we agree that it has not performed in a reasonable way, we will intervene and we will suspend. We have consistently suspended insurers that have done that.
To the second question about—sorry, I lost my train of thought.
Lord Vaux of Harrowden: Information, consumer understanding.
Mark Bailie: Consumer understanding. When you hit our home insurance front page—this is before the quote; this is the research phase—you will see a very simple table that says what is and is not covered. Within that is wear and tear and damage. We do not believe that that is sufficient, which is why since at least 2016—we cannot quite pick the records of the question set beyond 10 years—we have always asked, “Is your building well maintained?” to draw out that exact point. On the two accidental cover, for buildings and contents, we specifically disclose wear and tear and say insurance is not for gradual long-term deterioration or poor workmanship, it is for accidental damage and a sudden effect. The reason those are in the question sets is that it is very important for customers to know at that point what insurance is really there for.
Even with totally transparent disclosure in the question sets, do I think every customer understands it? Probably not. Do they remember at point of claim or do they think it should be covered at point of claim? Therefore, I think there is a reasonable chance that this is one of the definitional problems we get to, which is the difference between an actual claim and a reported claim that I think will probably persist, and it is probably quite human.
Peter Duffy: I would answer that in a slightly different way. I am not sure you will particularly like the answer. If you look at consumer duty, there is a clear delineation between the duties of the manufacturer and the duties of the distributor. It is the manufacturer’s responsibility to create the product features, to price the product and to deliver against that. It is the distributor’s responsibility and consumer duty to make sure that the consumer knows what they are buying. There is a delineation. I think that is how we can say that we deliver against our consumer duty requirements. That is a question that needs to come back to providers in that way.
Lord Vaux of Harrowden: You think that is how it should be—you should not have responsibility for making sure what you sell is fit for purpose?
Peter Duffy: I think that if we had the data to do it, we would. As Mark describes, I took the number one travel insurance provider—number one sales by volume—off our platform a number of years ago. If there are concerns, you can be confident that we take those very seriously in doing that. But a regulatory regime has to look at the ecosystem and it has to at some point begin to allocate responsibilities and accountabilities across that, and that is the division that has been made. We come back to this data point, and that would create a very significant bridge to move things forward.
Q89 Lord Lilley: It has been suggested in the previous session and elsewhere that defining a standard product would help consumers to know whether that was all they wanted or something more. What is your response to the idea of there being a standard product?
Steve Dukes: I am happy to start with that one. One of the key features of insurance is how personalised it is to consumers in the UK. They have different demands and needs, they have different preferences, they have different affordability levels, they have different appetites, and they take different risks. Some people will go on holiday and be happy on a sun lounger reading a book; others will engage in adventure sports. Both of those are fine, but this is true across all parts of their lives. As a result, to get to a standard policy would risk being more fully featured than some consumers want or need, which would push prices up. The essentials policies that sit on these platforms to some extent do provide that. They provide the main cover that you need. They do not provide lots of cover in lots of other areas, lots of extras, but they try to hit that balance between, “We do not want you to be uninsured, we want you to buy something, but we want to cover you for the main risk”, so I think that to some extent they do that.
The concept of a standard product that fits what is a very personalised mix of consumers in the UK I struggle with a bit. I am always open to exploring that sort of thing, but we have to come back to the fact that this is a personalised product and that is one of the things that makes it unique.
Mark Bailie: Personally, I come back to saying that full disclosure and vibrant competition will solve these problems.
Peter Duffy: The committee should also understand that we normalise a lot of data for consumers. We convert the language of all these providers into a common language so that the customer can then see a product in a comparative way. To some degree, that happens—not in the way that you were describing, a full standardisation, but they get a comparative view as a result of the work we do.
Q90 Baroness Donaghy: One of you used the phrase “good outcomes”, which I was intrigued by because I did not know whether that meant a good outcome for the customer on the grounds of price, or a good outcome on a possible eventual claim that from the customer’s point of view was successful, or a good outcome that you did not have to suspend one of your insurance companies.
Peter Duffy: It is a good outcome that we have met the customer’s demands and needs and we have got them to the right product for them. That is different from whether that product delivers against the promise, but in terms of what you are looking for specifically—“Have we found you the correct product or the correct product set for you to then make a choice between?”—that is what we mean by a good outcome.
Baroness Donaghy: It is combination of the price at the beginning of the process and a possible claim at the end of the process?
Peter Duffy: It starts with your demands and needs and what the features of the products that you are looking to purchase are, and then the price is one of those characteristics, but you have to get to the right product for you in terms of how that works. Maybe an example would help. If this is a travel insurance policy, if you have pre-existing conditions—if you have cancer, for example—are we getting you to a product that would then deliver the insurance that you need if an incident happened while you were away? That is a different thing from: does the insurer actually then deliver against that promise? That is the data that we are asking to be shared.
Baroness Donaghy: Let us take two of the biggies on houses. It is often how you interpret a storm that seems to be an area of tension, where somebody thinks they are covered and then it is the wrong kind of storm or it is something to do with wind or your roof is not quite as secure as you thought. It is also windscreens and the increased cost and sophistication of replacing windscreens, which we have heard about. Would a good outcome be ensuring that the customer knows about the different interpretations of those two big issues?
Mark Bailie: In the question set on home insurance and on the front page of the home insurance, it is clear that a building has to be well maintained. Do I think that the view of what “well maintained” means is well understood across the population? If I go to the Royal Institution of Chartered Surveyors’ website and its advice—and I think that it could be regarded as expert—it would say that you should inspect your roof twice a year and every time there has been a high wind event. Do I personally hold myself to that standard? I probably fall short.
On whether that leads to a mismatch—because on the basis of what is then in the insurance policies, insurers are turning to the experts, which is RICS—I know I fall short, and I run one of the largest comparison businesses in the UK, so I understand that that will always be a point of tension. The more we can do and the reason we have the disclosures in the question sets, the reason we highlight it in the one of 2,000 pages of content we have on the site, is because this is fundamentally important.
In that situation, I think that AI becomes a very powerful tool. Now, I do not mean generalised AI, which is, as someone described to me last night, a friend at a party who has no self-control; they are quite good fun at the party but they are a terrible thing to have in your office. We need to learn how to control these things and target them. Rather than you going through 2,000 pages of data, you can ask our system—and I think others have the same—in natural language, “What does this mean?” and it will answer you in what we term “financially safe AI”. That is probably what we need to do because these gaps you are talking about are, sadly, very human. We need to use the technology that is now emerging to try to close that gap and make it much more accessible for people.
Baroness Donaghy: I have one more if I am allowed. I am your ideal inertia customer, incidentally.
Mark Bailie: Can I sit down with you after the session and take you through it?
Baroness Donaghy: I am the absolute dream, until one day I had a “Happy Birthday” letter from my travel insurance company saying, “We will no longer cover you because you are 80”. Inertia does not work, I accept that. Like your limitations, Mark, I have that limitation that I thought sitting in a corner at the party and keeping quiet would be enough. Do you have advice about ageist insurance policies?
Mark Bailie: I have a huge amount of sympathy for this, because I have the same issue with my parents’ medical conditions. Age is something that comes to us all. Insurance is very effective at managing and collectivising broadly homogenous risks. Things you can divide—the fact that you could pay £240 and insure the median house in the country when, based on the rule of 1%, you should be spending £2,500 or £3,000 maintaining it is an incredibly efficient outcome.
As soon as you start moving out towards the boundaries of that distribution, risks become more heterogeneous and, frankly, that commercial model starts to fail. Whether it is age or mental health conditions or other forms of vulnerability, the price that a commercial model can get to, because it cannot be put into a homogeneous pool, becomes very difficult. I have some sympathy for the insurers with this.
I think that there is a wider question. We have been part of the FCA and the Treasury’s Financial Inclusion Committee, and where we eventually got to is: do we collectively want to hold ourselves to the standard of how you look after the most vulnerable in society and, for that bit, do you have a different solution? We did it with Flood Re; they do it in Australia with Hurricane Re. It is a wider political question that I do not think I have a great answer to, but I think that it is worth being prosecuted.
Q91 Lord Smith of Kelvin: You already alluded to this, but do you think that consumer duty has changed the insurance industry?
Steve Dukes: It is early days but I am pretty positive about the direction of travel. For example, it enables businesses such as ours to have very constructive conversations with insurance providers, not about specific rules but about the principles of customer outcomes, so it means that you do not have to allow for every single situation. You can have the conversation about the principle of it and effect change that way. It has allowed the regulator to have constructive discussions with a number of firms and effect change that way. The regulator is still going through some of its back book of regulation to see whether any of that needs to be cleaned up. As I say, it is early days but it is moving in the right direction and it is evolving the industry, yes.
Peter Duffy: Yes, in a similar way, I do not think that the consumer duty has fundamentally changed the business model, but it has improved how that is measured, how that is monitored and the conversations that we can have with providers. To the point Mark made earlier, if you take something such as AI or the Mills review, which was announced a couple of weeks ago, one of the important things the FCA has created with the consumer duty is an outcome regime where it does not really matter whether the customer purchases their insurance on a comparison site or directly through a broker, the outcome is the same. They need to extend that into AI as well and make sure that that is the case. It just facilitates a conversation, I think, that puts the customer, as well as the commercial, at the heart. That in itself is tremendously valuable.
Mark Bailie: Honestly, I think that the FCA gets too little credit for some things it has done. The soft power it displayed on premium finance, for example, where Nick Hulme made a couple of speeches about how premium finance seems a bit high and how it ties in with consumer duty. We watched the data over the next nine months. Average median and average premium finance rates for all insurers moved in dramatically and the standard deviation collapsed. It did it without ever having to do a study or write a rule—two speeches.
Q92 The Chair: In the meeting before, with Mr Timpson, he complained about the wide range of interest charge that was on credit products. The example he gave was where some charge 30% or more, others at 15% to 20%. Is it apparent on the information that you provide to the customer the amount that they are paying?
Mark Bailie: Yes.
The Chair: I appreciate it is in the price anyway, but do you actually spell it out?
Mark Bailie: In the results page, on a monthly policy you will see the APR of the policy, which is calculated based on the deposit they give and the number of monthly payments.
Peter Duffy: The GIPP regulation in 2022 really focused on the transparency and clarity of that.
Q93 The Chair: Okay. Finally, on the AI point, I asked AI to give me a quote, and I was quite impressed by the number of questions that it asked: “Do you want this covered?” There were a lot of prompts in there. It seems to me that AI will be a threat, but you, no doubt, will also be using AI to make the experience richer and for those like me who need to ask the right questions, that those questions are asked in the whole prompting process?
Mark Bailie: I think that the term “safe financial intelligence” is important. Generalised in-the-wild LLMs are not safe for financial decisions. We can show any number of tests we run with dramatically different outcomes, non-compliant journeys, non-compliant disclosure. We will have AI-compatible, safe financial journeys within the next six months. Our internal journeys—I am sure Peter and Steve are the same—will be there, with HelpBot helping you go through the journeys, will be live on everything by Christmas. It is a huge opportunity in itself to improve the customer experience.
Threat or opportunity? I will come back to a core thing. The UK retail insurance market is the most sophisticated in the world. AI is the opportunity for us finally to export this. That is what this does. This is not a threat; this is the world’s greatest opportunity.
The Chair: Do you think that the FCA is taking enough notice of the role that the AI LLMs are playing in this market?
Peter Duffy: Sheldon Mills, before he left, said that it needs to do an express piece of work over the next three to six months, and it is really important that that happens. I would make an additional point. If a financial services market is going to be regulated, it has to have deterministic systems, by which I mean that we have to give a response that is repeatable, explainable and auditable. You put the same information in, it gives you the same answer again in the same way. If you put in different information, we can explain why it is different. That then all has to be auditable. LLMs are probabilistic systems. They do not do that. They work on the probability of something happening.
To Mark’s point, unfortunately, if you have keyed your data in there, your personal data, you do not know where that data has gone to or what has happened to that data. That does need protecting, and the consumer does need to ensure that if they do something the outcome is supported by the same regulatory regime as everything else. The FCA has been proudly technology-agnostic. That is the right answer and that needs to continue with AI. It is not that it has not done enough; I think that it is absolutely on this. We just need to see the pace of delivery followed through.
Lord Hill of Oareford: How do you put a consumer duty on an algorithm?
Peter Duffy: I think that is a question they have to ask. You should not be selling financial services in the UK if you cannot meet consumer duties, so those organisations should not have the ability to do that.
Mark Bailie: De facto, they are operating regulated activity and they are unregulated firms. The boards of Anthropic, Google and OpenAI should be bound by consumer duty. That is the question that needs addressing.
The Chair: On that note, thank you very much indeed for a lively session. I think that you have made one or two sales. When I did use AI, I did not put my full age in, I must admit. Thank you very much indeed.
