Q&A on Dual Pricing
Question-I was reading an article recently about how customers who stay with their insurance company longer end up paying more in premiums. It made me think about my home insurance in particular.
I haven’t changed it for about 10 years, although I switch my car insurance every few years. I usually just auto renew on my policy, but now I’m wondering if I’m paying a lot more than I need to?
Answer– Paul Walsh, CEO, Peopl Insurance
There has been a practice within the insurance industry where loyal customers are charged higher rates than new customers, which has been the subject of recent Government review and proposed reform.
‘Dual pricing’ refers to a price differential in the cost of premiums offered to new and existing customers – with longer-term customers finding they are being charged more than new customers. ‘Price-walking’ is the term given to automatic increases to home and car insurance policies, year after year, simply because a customer has been with that provider longer.
While introductory discounts are a common feature for new customers among many providers it is unfair that some customers are effectively punished for remaining loyal. The best defence against such practices is to shop around, never auto-renew on an existing policy, and never take just one insurer’s quote as gospel. It pays to do your homework, or use a trusted financial institution or advisor to find the best cover for the best value among a range of insurers.