About 75% Pay More for Insurance
The concept of paying higher prices because of our loyalty is alien to most of us. We’d like to think that loyalty should be rewarded and not punished.
But not so, according to the Central Bank of Ireland’s report on ‘differential or dual pricing’, in insurance, or as the Central Bank put it, ‘customers with the longest tenure (loyalty) paying more’.
The UK regulator’s report on the same practices in the UK’s insurance industry, went further and found that the insurance market was not working well for consumers and many policyholders ‘were not getting a good deal’ on their (home) insurance.
A deeply disturbing finding in that report identified that, of those customers punished for their loyalty by paying too much for their policy, 1 in 3 were potentially vulnerable customers. They include senior citizens and those on lower incomes.
This large-scale increase cannot simply be explained by way of a change of risk.
The Central Bank’s review states that 72% of Irish consumers do not review their home insurance before renewal and consequently pay ‘significantly more than expected costs’ for their cover.
However, establishing that so many do not shop around for insurance does not go far enough. We need to highlight why so many opt to simply renew the current policy.
Is it that they believe they will not get a better price? Are these policy holders of the view that ‘the devil you know is better than the one you don’t? Is it simply because insurance companies make it difficult to switch to new policies?
One way or another, the Central Bank’s report confirms what we already know; ‘Consumers have a trust issue with insurers.’
We believe that the people buying insurance need to work together to get the best price for policies that suit them.
For too long, insurance companies focused on attracting new customers, knowing many would not search after year one.
That’s why, after extensive research among those seeking insurance in Ireland, we opted to join forces with credit unions.
Credit Unions are community-based. They are owned by the people. So, everything they do is aimed at looking after the interests of their members. Our job is to deliver on this remit when it comes to insurance. We do the shopping around among the insurance companies to find the best policies and the best prices. We are not tied to insurance companies, our loyalty is to the members of the credit unions, and our customers.
The are many calling for radical overhaul of the manner in which insurance companies in Ireland are selling. Change is starting, and it is changing for the better. Greater focus in now falling on the quality of insurance and marketing strategies, which are now starting with the people not the shareholders.
As one of the most trusted financial institutions in the country, Credit Unions are leading the way by working with community-focused companies to change the way insurance companies do business in Ireland.