Brands such as Tesco whose main business activity isn’t insurance use a panel of insurance companies and the premium quote of the cheapest insurance company on the panel is put forward to the customer. Tesco will be managing the panel and acting as a broker - not the underwriter - and the panel business model encourages the individual panel insurers to improve their competitiveness - they won’t acquire business on the panel if they’re not the cheapest.
However, a couple of potential downsides of this business model for the customer are;
- they may end up being insured by an insurance company you’ve not heard of / you know little or nothing about.
- insurance companies on the panel need to have low prices to increase their competitive position. To have competitive prices, they may reduce costs in other areas such as their claims service. Hopefully, all panels will have service level agreements covering key areas such as customer service and claims handling that individual panel insurances have to sign up to provide a high quality, consistent service to customers.
Panel arrangements such as the above are used by many of the ‘big names’ in the insurance market where insurance isn’t their primary product - e.g. AA, RAC, high street retailers such as John Lewis, M&S, Sainsbury’s, high street banks, along with some of the traditional large insurance broker names such as Budget, Hastings (there will be others too).
I don’t know if the name of the specific insurance company providing the cheapest price on a panel is disclosed to a customer at the time of the initial quotation; IMHO it’s certainly something that’s worth checking out as it might influence a customer’s decision on whether or not to accept the quote (e.g. if a customer’s had a bad experience using that insurance company in the past).
Always do your homework when buying insurance, and don’t always go for the cheapest…………..