Pru finds favour with Egg

Internet bank Egg, which has repeatedly stressed its independence from parent company Prudential, has been caught out offering preferential quotes from the insurer on its online motor insurance supermarket, launched on Friday.

Internet bank Egg, which has repeatedly stressed its independence from parent company Prudential, has been caught out offering preferential quotes from the insurer on its online motor insurance supermarket, launched on Friday.

In a number of quotes obtained by the Independent on Sunday, Prudential offered the cheapest insurance every time, begging the question as to how independent the site actually is. One industry insider suggested that the eight other insurance providers are on Egg's panel to suggest competition, whereas in reality Prudential will undercut most quotes with loss leaders.

Egg and Prudential firmly deny this. Phil Ashkuri, deputy director of operations at Egg Intermediation, said extensive testing had suggested the opposite. In fact, Prudential would not be underwriting the majority of policies. He would not, however, disclose who he thought the most likely insurance provider would be.

Early indications on Friday showed that out of the quotes given so far, Prudential was coming up with the best price for one in five quotes. Egg would not give any statistics for the other providers, so this figure gives no indication as to the actual proportion of best quotes Prudential had provided.

Prudential denies it is colluding with Egg to gain customers. "The indications from Egg are that we won't get the largest share of the custom," says Nigel Bruce, head of product marketing at Prudential. "We are competitive in certain areas, particularly for those with considerable no- claims discounts. We don't compete so well in the high-risk sectors."

Norwich Union, another of the panel members, said it was not concerned about favouritism, reaffirming Egg's conviction that it is an independent site. It backs up Prudential's comment that it is competitive in certain areas of the market. Norwich Union says its most competitive quotes are for cover on high-specification cars.

Egg, which will launch home and travel insurance by the end of the year, is desperate for its insurance venture to be a success. The internet bank's share price has fallen from 160p, when the company floated on 12 June, to 136.5p on Friday.