Established brands including Bought By Many, Aviva, More Than, and Saga have all introduced products to address the issue of dual pricing. Now Brolly has entered the ring with a home contents product that decreases in price over time.
Dual pricing has put the insurance industry in a negative light among consumers for quite some time. New customers are often offered better rates than existing ones, while there are often barriers to switching that make it difficult for existing customers to get a better deal.
One such example is the prevalence of pre-existing conditions in pet insurance. If a claim has previously been made for a certain condition on another policy, most insurers will not cover that condition for a new customer. Yet Bought By Many bucks the trend. It does not charge existing customers more than new ones, and it will cover pre-existing conditions for pets (provided a claim for that condition was not made in the previous three months).
This will help reduce the barriers to switching. Across pet, motor, and home insurance, pet has the lowest switching rate. Only 15.6% of customers switched to a new policy in 2018 according to GlobalData’s 2018 General Insurance Consumer Survey. Pet insurance also had the highest rate of automatic renewals.
The latest player to address the problem of dual pricing is insurtech Brolly, which has launched a home contents insurance product that rewards loyal customers. Brolly Contents allows people to insure home contents of up to £40,000 within the home and £10,000 outside of the home. The process is facilitated through Brolly’s app, utilising a chatbot as well as computer vision to automatically identify items that are to be insured.
But what truly sets Brolly Contents apart from its competitors is that loyal customers receive discounts instead of premium increases. For each claim-free month a 0.5% discount is applied to the policy, up to a total 25% discount. If the customer makes a claim in one month the discount is frozen, and then resumes the following month. The policy is also renewed on a monthly basis, so customers are not locked in for the year and can cancel at any time.
Brolly’s approach improves on previous version of the dual-pricing model. Allianz and Bought By Many have both pledged that existing customers will not pay more than new ones, while Saga’s solution provides fixed premiums for three years. More Than’s approach rewards existing customers by introducing a cashback scheme.
Brolly combines the above approaches, both ensuring existing customers do not face higher premiums than new ones and rewarding loyal customers with discounts. While contents insurance is not the most sought after product – with just 28% of household policies for contents only – the rise of Generation Rent will undoubtedly increase demand. Brolly is well positioned to differentiate itself from competitors and succeed in this market.
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