Hit enter to search or ESC to close

logo-block
alva
Get in touch
logo-block-tablet

Renewal pricing: brand equity under fire

Increasing customer churn and threatened brand equity are two of the emerging risks the insurance industry will have to deal with if the issue of excessive renewal quotes remains unaddressed.

Which? waged a campaign in 2013 against financial services companies to end “rip-off” premium customer phone lines. The campaign was successful: RBS and Barclays moved first, capitalising on positive sentiment for their timely response to the issue, while the insurance industry, in the wake of February’s floods, was said by Floods minister Dan Rogerson to have “got the message”.

Among Which?’s gripes was the free phone lines available to prospective customers, while existing customers seemed to be “punished” for their loyalty with an 0845 customer service number. Hot on its heels comes the current Which? campaign for transparency on renewal pricingWhich? is now calling on general insurers to print the original premium alongside the renewal quote on renewal letters when a policy comes up for renewal.

Though different in some respects, customer loyalty is at the heart of both campaigns. alva’s analysis has revealed an uptick in negative sentiment toward insurers over what customers perceive as nonsensical differences in the price of renewal versus purchasing a new premium. Customers do not feel loyalty is being rewarded, prompting switched-on customers to scope out the best deal at renewal by either purchasing a new policy from the same insurer or taking their business elsewhere. Insurers of those who are less tech-savvy (particularly the elderly) have been exposed as taking advantage of a seemingly misplaced trust that the insurer will provider a fair deal at renewal.

Ultimately, however, inflated renewals could offer more headaches than benefits to insurers. While boosting renewals might seems like a necessity in a highly competitive market, the cost of punishing loyalty could lead to a race to the bottom in terms of brand equity and loyalty – older, well-established firms are particularly vulnerable on this front. It also raises questions as to whether low introductory premiums pay off in the long run if customers become apathetic towards insurers and simply switch every year to the insurer offering the best price.

As the Which? campaign gains traction and the issue comes to a head, the issue of renewal pricing might offer a reputational opportunity to the industry if insurers work together to address the growing concern. It may also offer an opportunity to a single insurer if one were to lead the industry in this regard – particularly given acting alone (by removing introductory offers, for example) might prove too risky if the likelihood of other insurers to follow is doubtful.

See more articles
Join our Newsletter

Be part of the Connected Intelligence community Join our Newsletter

Join our Newsletter

Businesses looking to reopen have to face the possibility of the shuttering of stores again. Apple stores in the US have locked up as cases surge while Walt Disney World and cruise lines have all delayed reopenings.
👇 Download the weekly #Covid19 report https://t.co/CzDiw4uJjp

Damage to an organisation’s reputation can manifest itself in a number of financial but also non-financial ways, often taking many years to recover. We look at the different ways in which you can calculate the cost of a bad #reputation?
👇 https://t.co/nGwW3dyyRJ

The rapid digitisation of the economy continues apace this week, with personal transport the latest to feel its effects. A surge in ecommerce sales paints a bleak picture for bricks and mortar businesses. Download the weekly #Covid19 report: 👉 https://t.co/CzDiw4uJjp #reputation

Load More...

Be part of the Connected Intelligence community

To join our Connected Intelligence community simply complete the form below.

Sign up to alva’s Intelligence Resources, including our Daily Sector Briefings and our COVID-19 Weekly Insight Reports Subscribe now