“When is a taxi like a website?“ might sound like a  child’s riddle, or the start of a corny joke.  But in fact a psychological quirk called the “taxi-meter effect” means that people will knowingly pay for overly expensive or inadequate insurance cover from comparison websites.  And if you think you’re immune from that you might just be surprised.

For the majority of us the back of a taxi is an uncomfortable place to be, because of the relentless ticking over of the taxi-meter.  This is what give the “taxi-meter effect” its name, and it sees people preferring flat rate fees to metered costs – even when they know that the flat rate fee is more expensive.

The reason for this is that we mentally trade off the increased expense against the removal of anxiety about the open ended nature of metered costs.  It’s why people happily pay a flat monthly tariff for their mobile phone while knowing that “by the minute” billing would cost less.

However the taxi-meter effect doesn’t stop at costs based on consumption or use.  One of the most surprising ways it affects our behaviour is in the use of comparison sites on the internet.

What comparison sites give us is that satisfaction of finding flat-rate costs, and being able to review large numbers of quotes at one time.  However, that satisfaction is often ill founded.  That’s because those quotes are based on your responses to standard questions.  Issues that aren’t fully addressed, such as health, may make those quotes inaccurate or insurance invalid.

However the appeal of the fixed figure in front of us, rather than going to a broker, can be strong enough to make us ignore our misgivings.  We’re also subject to two unconscious biases which skew our ability to make a rational choice.

The first of these is “optimism bias”.  Quite simply we tend to think that we’ll be okay, and that things will go well.  This allows us to forget our misgivings, and to pass over circumstances and facts that haven’t been reflected.

The second is “availability bias”.  This means that we give disproportionate weight to what’s in front of us.  Once we have the table of quotations we believe that we have a comprehensive and unbiased view of what’s available.  In fact brokers such as The County Group have their own panel of insurers and have access to preferential rates due to their ‘bulk buying power’.

The best way to counter the taxi-meter effect is to be aware of it.  Next time it tempts you to click on a quote just pause and ask yourself who is going to guide you through the jargon, or give you advice on identifying, measuring, monitoring and controlling risk.

That’s where using a broker like The County Group comes into its own.  And that’s where people learn the difference between the short term satisfaction of ticking off a job done, and the long term satisfaction of lasting security and peace of mind.

Written by John McKenzie – Hypnotherapist

We would like to say a huge thank you to John for writing this fantastic article and enlightening us in to the psychology of purchasing insurance. We would also like to remind you that here at The County Group, we provide a range of Personal and Business Insurance policies!

For more information, please call –

Personal: 0333 202 6340

Business: 0333 400 2314