While avoiding the lazy tax this year I got a comprehensive car quote from my current insurer via their web quote system to compare against the renewal. Renewal offer, $790 (including ‘free’ roadside). web quote $650 (no ‘free’ roadside). I then logged into my account with them and got another quote, only $625 (no ‘free’ roadside). It might pay to get new quotes while logged into one’s existing insurer account?
While buying that policy the web sales system offered me a 20% discount to also buy a new home and contents insurance. That saved me another $500 against the renewal for the same policy, renewal already in hand and known to be competitive.
The variations of the ‘get the lazy ones dollars game’ seem more perverse and varied than expected. The minimum game is
receive renewal
get online comparison quote
log into your account on existing insurers web and get another quote
buy the ‘best’ however you define that
look for other sweeteners and check them as they may (or may not) be beneficial
Renewal offers seem their ambit hope to enhance their P/L equation
I usually do that. When I got the online quote last time and it was substantially less than the renewal letter, I rang them to try and get a better deal.
I was a bit taken aback when the call center person said something along the lines of “yes, we can see your online quote and has been flagged as not proceeded with. We were expecting your call. We will send a new renewal letter that matches the online quote”.
I very carefully checked every detail of the new renewal when it arrived and the only difference was the reduced premium.
I hope you were not on hold for long. Some years when I tried that ‘they’ found a way while other years they told me to buy the new policy since nobody had the authority to match new quotes that were designed to get new customers and thus were as sharp as they could be.
Telling an agent who has no discretionary authority they should match the new quote because it costs more to get a new customer than to retain an old one is an exercise in futility. Asking for their ‘customer retention unit’ by whatever name? How much time should a customer invest in [trying to] getting a company to react reasonably when there is zero difference between a renewal and a new policy, the latter being some form entries with a known $ outcome?
That is why I was ‘taken aback’ by the insurance company’s response at the call center level.
I was expecting to have some sort of argument. To cancel my existing policy and take up the new offer for new customers.
They just reduced the premium on the spot.
For the baby boomers and older many businesses promoted the ‘supposed benefits’ of being a long term customer and loyalty to the brand. Mostly based on feelings of security and trust. Those were the days of news paper and radio and limited B&W TV. Creditability often came through program sponsorship. Choices were or appeared to be limited.
As consumers lack of critical information and product content likely worked to reinforce the status quo. When AMP and MBF demutualised it sent a clear message of what was truely valued. On the second even the AFR offered a view. One that questioned whether members would be the worse off with the loss of the not for profit status and the motives of all concerned.
MBF members were paid cash for the BUPA take over. Were members sufficiently sophisticated as investors to know what was best? We surrendered a significant amount of personal value, $2.4B between 800,000 approx members. That to a new owner who not only had profit as a motive but a need to repay the $2.4B it had expended to do the deal.
One big winner?
MBF chief executive Eric Dodd, who helped negotiate the deal, will pocket a $1 million retention payment if it succeeds.
No surprise today which fund is one of the most expensive for members.
For AMP the tale of woe could not be more evident. It went public and converted members stored wealth into shares. Those who sold sooner and wisely were well rewarded. We held over 1,000 shares. From peaks around $20 the soon to follow lows of a few dollars burnt those not so wise in the ways of shareholder value. We were among the wiser.
Today our Automobile Clubs still trade the loyalty to members branding. Of their insurance products and business structures it’s often suggest the benefits are more creative than tangible. NRMA Insurance is independent of the Not for Profit motorists club. There is an agreement to use the name of it’s prior owner. One only needs to look at the policy PDS of any policy offered to realise behind most is a business with a profit motive.
Are we any better off?
Apparently only if we shop around each year. This is assuming we can distinguish dud policies and poor customer delivery. Or promises of service we hope never to test.
Isn’t the attractive agent on the AAMI commercials the same lady and same ‘footage’ for the past 2 decades? Or is she a look-alike? How much more security and credibility in advertising can there be when staff are so long serving and never ageing?
I always wondered if she gets an ongoing royalty or took a paltry sum to give up her appearance rights.
I have concluded it is not worth shopping all around, just quoting products from certain underwriters who will be competitive with themselves in their branded products as well as against other underwriter’s products.
Some underwriters do not want certain business, for example have a Renault and getting quotes from certain underwriter ‘families’ underscores it is a waste of time because they do not want the business excepting at high premiums to the mid-market and it is like that each year. Buy another brand of car and it could be the reverse so that is a time to compare the entire market. For example Allianz loved my Citroen with sharp premiums but when I updated to a Renault sedan the new price essentially encouraged me to move on, big time; I took the hint. I had to check for this post and Allianz wanted about double what I pay, admitting the Allianz policies are arguably better in some respects.
Most reviews have lovers and haters, personal cases dependent. So many reviews focus on ‘low cost, easy to buy, smiling faces, great web site’ who have never had to claim. Those ‘reviewers’ who had to claim seem to have mixed experiences with most of them.
That seems the business model for all the auto clubs that sell everything beyond roadside service, and I would not be surprised if roadside service got outsourced so the club was nothing more than a phone bank that referred a member need to their list of providers.
My observations of the RACQ are similar. The current CEO came from a similar level role at SunCorp. Reputedly on a million dollar plus package in the old job.
To note this year the RACQ has 2 board positions members are able to nominate for. Although one needs the support of at least 30 eligible financial club members. Having nominated there are other suitability criteria. To help things along the directors who are retiring due to rotation have both nominated to be re-elected to the vacancies.
(It’s a question of comparing the increased risk with the decreased risk.)
On the issue of “can’t get out” though … if the net effect is increased risk, by that logic someone who is unemployed, bumming around at home, should be charged more for insurance than someone who is a 9-5 wage slave in an office somewhere. Actuarily that could make sense. Politically that might be unsaleable.
Anecdotally, the risk of being unable to get out relates to two things:
Lack of (working) smoke detectors
Being asleep
Working from home may not be subject to the second risk.
There’s no substitute for having working smoke detectors!
But, overall, the fact that insurers do offer a discount for retirees etc. at home, suggests that the balance of risk is in favour of being at home, despite the small extra risk of dying.
Recently we had our home insurance renewal sent to us from Allianz. The premium last year was $1,900. This year it is $27,500. The letter was just a normal renewal letter advising us of the various ways to pay, getting a a new mortgage was not one of them!! The under writer was contacted and their claim was that they had reviewed the flood risk and we went from lowest to highest risk. Our local area had new drainage installed some 30 years ago and there has never been a flood or water over the road, even in the recent heavy rain period. We cancelled our flood cover and the premium is now back to last years level. Our logic is that we believe there is minimal risk of flood therefore why insure for it. Why are the underwriters getting it so wrong? I was told that I could propose a change the rating if it was backed by the Council, why am I doing their work.??
I live in Ballina. Many people in our shire suffered significant flood damage in March 2022. Many are still homeless, and Lismore is but a shell of what it once was.
Our house is in a relatively new estate which had some serious council imposed conditions on slab level heights relative to AHD, or, “Australian Height Datum”. The purpose of the development condition was to “flood proof” us for at least the next 100 years. As a result, none of the hundreds of houses in our estate suffered any damage at all.
It seems that the insurance companies could not care less. All that they care about is our postcode. I was insured with Westpac. My latest renewal notice had newly introduce “flood cover” at some $2700 and about $4,000 all up. This is probably peanuts compared to what many others must pay as a condition of their mortgages. I asked Westpac if I could opt out of the flood cover and they said no. So I looked around…
Amounts for compulsory flood cover ranged from $2,700 up to over $30,000.
Good old NRMA (you know, beautiful TV adds about koala habitats etc…) quoted me $34,000, for ONE year!. This was at least FOUR TIMES greater than any other insurer. NRMA also decided that the replacement value of my house was TWICE as much as I needed in replacement value - I KNOW what it would cost to rebuild my house… ditto for contents. I had no opportunity to indicate how much I wanted to insure for… GIO, APIA etc all had more reasonable(?) rates but all also demanded compulsory flood cover. It is my business if I do or don’t want flood cover.
I thought that the insurers had access to infinite data with which to set premiums. The massive spread indicates to me that their “actuaries” arbitrarily create their premiums based on what they think that you can pay. Absolutely no consistency, or, credibility.
I only know of one home owner in my estate that has taken flood cover. The rest of us have confidence that the council got it right, and have opted out.
I only found one insurer that allowed opting out, and that is ALLIANZ. Well done Allianz! you are now my insurer. To NRMA , SHAME ON YOU.
If you mean the development was designed based on an ARI (annual reoccurrence interval) of 1 or 1%, this doesn’t mean it has been designed to flood proof for the next 100 years.
ARIs or AEPs are probabilities. An ARI of 1 means each year there is a probability that the flood level will exceed the design level of 1% in any year. The same probabilities exist year on year, irrespective of what happened the previous year. It is possible that two ARI 1 events can occur one year or the next, or after a few years. In wetter climate cycles like that which has occurred recently and predicted for this summer, ARI of 1 could be exceeded a number of times.
Unfortunately there is misconception that an ARI of 1 means a flood will only occur once in 100 years.
Insurance companies know this and will price risk into their insurance premiums.
to syncretic:
Probably different data sets. Maybe different assumptions. They still need to work on their modelling. I has a discussion with NRMA earlier today, following their email asking “how did I like the quote?” Eventually got a reasonable replacement value for home and contents, AND, No FLOOD cover. Down from $34000 to $2650, however, Storm cover only available with flood cover. I have been with NRMA for well over 50 years. Bye bye NRMA!
note that AAMI, GIO etc all seemed to be around the $9K mark.
Might I suggest that choice does an expose on this sort of practice?
Previous terminology using Average Recurrence Interval (ARI), such as in ‘1-in-100-year event’, is now discouraged as it suggests an elapsed time between each event. For example, after hearing that a location had experienced a 1-in-100-year event, you might be forgiven for thinking, ‘I won’t live to see another one of those in my lifetime’. However, statistics show there is a 26 per cent chance that a 1-in-100-year event could occur during a 30-year timeframe.
As an update to my last post. GIO have advised they will cover flood in our local area, charge will be $3,000. So some insurers get it right. Seems to be a lot of variability in under writer assessments and data sets. The challenge for assessors is to ensure risk is accurately assessed to drive max profitability for the Insurer…must try harder !!!
Ex-insurance sales here. These problems are likely to become more pronounced as the risk of severe disasters increase.
Typically, insurers assess risk by looking at the likelihood of an event occurring, as well as the likely damage that could occur. Things like ‘alarm discounts’ have been around for ages to account for how your house design and fittings could minimise both risks. There has never really been any need for insurers to go into details for how an individual house could be more resistant to flood or fire than its neighbours, as these features were rarely present and these events were so infrequent.
This is rapidly changing, and it will likely take insurers some time to get data. Let’s go back to our two risks, the likelihood of a claim and the likely size of a claim. Although it’s easy for us to say ‘oh my house is raised so that reduces the risk,’ actually converting that to values for those two risks and ensuring it can be calculated for any property is a mammoth task.
So what does it mean for the consumer? Well if your house has mitigating features the first step is to shop around and see if any insurers already consider that. Do they assess your individual address, or just suburb? What questions do they ask? Do you get to specify your cost to rebuild or is it presumed the insurer can accurately calculate that from your answers?
For those who’s individual building might be HIGHER risk than it’s neighbours, things will only get harder. Whilst it’s great if insurers start to ask more questions to give a fairer premium, those who are subsequently identified as lacking mitigating features are going to wear the cost. I would argue these demographics are those least likely to be able to wear the cost as they are likely to be in older buildings, and can’t afford to move or renovate.
Unfortunately, the insurance industry, government and consumer organisations are all unable to come up with any easy answers for how to balance this.
Important to consider also that they may have concerns that their data set (history of claims) is out of date. Let’s say that the climate is changing but we don’t know how far and how fast, but we think that a higher frequency of extreme weather events will occur in the future … then the risk also has to include some unknowns i.e. allowance for how wrong they might be in their estimation.
A couple of points though:
you have to allow for the cost of demolishing and disposing of the old house
in a mass claims event, there will be a shortage of builders and building materials - so that the cost is higher than it would otherwise be (hence if you insist on the normal rebuilding cost, that could put you at the back of the queue and it will take more years before you have a replacement house)
Based on my recent experiences with Budget Direct and feedback about claims made by two of my near neighbours and a claim made almost two years ago by my daughter all of whom have property on the western side of the Brisbane CBD, insurance Companies are pushing back hard on claims. In most cases the approach seems to be to be to say that the claim has been rejected on the grounds that the failures/damage after a rain event was the result of poor maintenance of the property.
This is despite the fact that no insurance company reps have ever visited the properties to assess the state of the maintenance and assure themselves that all aspects of maintenance (eg: electrical, plumbing, roofing, tiling, carpentry, brickwork, structural) are appropriately maintained at the time they accept the renewal premiums. It seems they rely on a statement from the property owner (who in my opinion is unlikely to have all the skills necessary to assess the status of the maintenance) regarding the health of the properties maintenance standard.
This practice by the insurance companies is poor management and leads to much consumer frustration, time wasting and cost. It is time they stopped this practice of avoiding their accountability and passing the buck onto the consumer.
If insurance companies take the premium they must take accountability for the risk.
I’ve just had an ‘interesting’ experience whereby the quoted home insurance premium is significantly more when declaring a prior claim; in particular, the premium increase is more than the (minor) claim. It makes me think that it is not worth making minor insurance claims.
Background: I received my (Westpac) home and contents insurance renewal due March 2023. The premium has gone up 20% (which seems fairly common) so I thought I would shop around. I normally do this at least every two years anyway. Two years ago I made a claim for a broken window. The cost was $1300 and the excess was $500; in my opinion a minor claim, and my first for the home so I didn’t think it should adversely affect insurance.
While shopping around, I got an online quote estimate from Budget Direct. There is a question regarding previous claims and it was a little unclear if I should note the previous claim. I initially answered no to ‘Previous Claims’; the quote was ~$2320 for Home and Contents. I then went back and edited the details to say I had made a previous claim; I was specifically able to say it was breakage of glass so it was obviously not a high value claim. The quoted premium then went to ~$3430! (Nearly $300 more than I got back from the claim)
This leaves me thinking: why would I make a minor claim if it is going to have such an adverse affect on quoted premiums from other insurers? In the case of Westpac, I don’t know if the 20% increase is just an average increase or if they have penalised me for a minor claim.
I haven’t explored other insurers to see if there is the same impact of prior (minor) claims on quoted premiums. It might be something Choice can explore.
