Misleading Car Insurance Advertising

The pressure on leading car insurance companies to stand out in a very crowded market place is enormous. As consumers we are bombarded with communications by insurers in print, television, online and by telephone. Some of these advertisements overstep the mark with promises of discounts and savings on motor and general insurance products.

The Financial Services Authority (FSA) has warned the insurance industry to stop using adverts that include extravagant claims of possible savings, or face regulatory action. The warning from the financial watchdog follows a review of press advertisements from 57 firms selling motor and other types of insurance.

The FSA found that 57% of motor insurance advertisements with savings claims were either unclear or misleading. The FSA said too many adverts give the impression that most consumers are eligible for such savings when in fact only a few are.

A Direct or at the FSA commented " Mostly people rely on insurance to protect them and advertising is a major influence on what they choose to buy. So it must be clear, fair and not misleading, leaving people with a balanced view of what on offer. This work demonstrates that firms in the car insurance market must ensure that the claims the make don't mislead.

The FSA has contacted managers of firms where they were concerned to improve the quality of advertising. It will repeat its review in three months (April 2007) and decide whether further action is required.

A spokesperson for the consumer group Which? passed comment on the actions of the FSA by saying "The Advertising Standards Authority, which looks after non-financial promotions, publishes complaints on its web site. It doesn't just ell firms behind closed doors that they have three month to improve".

Source: Guardian Unlimited.
17th January 2007.