Hippo Insurance has been fined R1 million by the Enforcement Committee of the Financial Services Board for withholding information given to clients who called their call-centre between 19th April 2011 and 7th September 2012.
Who is Hippo Insurance and why were they fined?
Hippo Insurance offers a service of providing ‘competitive or comparative quotes’. What this means is that they provide customers with numerous insurance quotes from various ‘different’ insurance companies, thus letting customers find the best/cheapest offer for their needs. Despite claiming to do this, they were deemed to have not clearly disclosed the very important fact that all the quotes were sourced from insurance companies that are all part of the Telesure Group. Basically putting it, people were getting quotes from one parent company and not from different companies. According to the website of South African Insurance Times & Investment News, Hippo Insurance consequently: ‘followed an approach that gave preference to quantity of business over quality of service rendered to clients.’ Hippo Insurance also did not state that they are a Financial Service Provider (FSP). They were also accused of not providing insurance quotes from insurance companies that were not part of the Telesure Group (like Alexander Forbes, Mutual & Federal and Santam). Apart from the fact that Hippo Insurance was fined R1 million for withholding information, they were also ordered to pay costs in the value of R500,000.
Has Hippo Cooperated in Rectifying the Processes and providing more Transparency?
Based on various internet sources that reported the issue, Hippo Insurance ‘accepted full responsibility for the contraventions and fully cooperated with the Registrar’s staff and processed, and displayed a sincere intention to comply.’ The Registrar also acknowledged that: ‘there is no evidence of any prejudice resulting from the contraventions.’ Hippo Insurance were also prompt in addressing in amending the compliance issues and its processes where required.
Hippo Insurance and the Telesure Group
In our previous profile post about Hippo Insurance we mentioned that one of the main forms of criticism facing the company was the fact that unlike other aggregators (in any field), that they have not encouraged competition among the insurance companies seeing how most of the quotes they offer are all from the same group – the Telesure Group (which comprises the following brands: 1Life, Auto & General, Budget Insurance, Dial Direct, ibuyeco, 1st for Women, Virseker, Unity Insurance, Virgin Money Insurance, AA Insurance and Prosper). The Hippo Insurance website previously did not make clear their connection with the Telesure Group or with the partner companies, but now the Hippo website does lists it’s ‘partner’ companies and states that it is a FSP, but still does not fully disclose that it is part of the Telesure Group or where the insurance quotes are given from – although the physical address that it provides does connect Hippo with Telesure for those who happen to check. In addition two add-on motor insurance clauses – Dents & Scratches and Auto Top Up are also available with other insurance companies in the Group.
Telesure Investment Holdings managing director, Tom Creamer, however told one of the reporting websites on the subject that: ‘he believed that the company had always been transparent when it came to the insurers that Telesure owned and operated.’
Bottom Line
The FSB fined Hippo Insurance R1 million plus R500,000 costs for not disclosing that they are part of the Telesure Group and that Telesure also owns the companies from which they have sourced online car insurance quotes that Hippo provides, and also that they are a registered FSP. According to the various online resources that covered the subject, Hippo insurance has gone some way in rectifying these discrepancies on their website. Nevertheless, these same sources and other critics still believe that due to the fact that the Hippo website still does not clearly mention the fact that the insurance quotes are only, or mainly, from the Telesure Group that Hippo Insurance is still not as transparent as they should be.
After reading the above, we can’t leave our readers without a word of advice: Until such time that insurance aggregators truly compare prices between ‘real’ different companies with no connections or self interests, always remember to shop around and get quotes from various places.
02.07.2015 Update
In order to keep you up to date with the most recent information available, as of this year, Hippo is apparently no longer a Telesure only aggregator. The site does now offer the possibility of quotes from non-Telesure companies, including Ace, Regent, Oakhurst, Hollard and Standard Bank. According to Hippo, other companies have also been approached, though some have refused to participate in Hippo’s services. So, the good news is that it looks like Hippo have learned from their mistakes, and quotes given by the site will now be more fair in terms of the possible companies you can receive estimates from.
