Premiums at the point of renewal for loyal customers have increasingly been in the spotlight. Numerous cases of new customers’ premiums being priced considerably lower than existing, loyal customers have forced the insurance industry to re-examine how it should be treating longstanding customers and their insurance.
It is often expected that longstanding customers will benefit from the best deals as a reward for remaining loyal to a single brand. Yet this is not the case in a number of personal lines segments, with new customers often being offered the lowest premiums while existing customers with similar risk profiles see their premiums increase, as reported by the BBC in October 2018. Insurers have been taking steps to rectify this, and the launch of MORE TH>N REW>RDS is another step in the right direction.
MORE TH>N REW>RDS is the first cashback-style scheme to be offered by an insurer. Customers can register their bank card with the scheme and receive unlimited cashback on purchases from well-known brands. The earnings are stored in a wallet, with the aim of helping loyal customers in the home, pet, and car insurance markets to offset the cost of renewing their insurance.
At the point of policy renewal, customers are able to decide whether to put the savings from the wallet towards the cost of renewal or, if they choose not to renew, pay a £35 administration fee to cover the cost of the scheme and receive the remaining balance from their wallet.
The success of the scheme will be most evident in the retention of car insurance customers. GlobalData’s UK General Insurance Consumer Survey found that 33% of individuals switched to a new provider at the point of renewal in 2018. Switching rates in the home and pet markets were lower at 27% and 16% respectively.
MORE TH>N is not the first to try to address the issue of dual pricing. Aviva recently launched AvivaPlus, which contains a renewal price guarantee. This means at the point of renewal, existing policyholders will get the same or a better price than if they were a new AvivaPlus customer.
Policyholders in the motor and home markets also benefit from the ability to pay monthly without interest, change cover or cancel without admin fees, and select from three levels of cover.
Despite MORE TH>N REWARDS clearly trying to minimise the inequality between new and existing customers, it does not directly solve the issue of dual pricing. Yet it will be beneficial to the company, as it has the potential to reduce switching behaviour among current customers.
Meanwhile, consumers will benefit from cashback on their day-to-day purchases with the aim of reducing the future financial pressure that can occur at the point of renewal.
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