According to a central bank study, up to a quarter of policyholders believe – mistakenly – that they are better off sticking with their current provider.
Only one in four people switch insurance providers when their policy is due for renewal, the central bank said in a business letter on Thursday.
A large majority of auto and home insurance customers (80) actively research and compare prices before purchasing or renewing a new policy.
But a large proportion — a quarter of auto insurance customers and a fifth of home policyholders — still believe loyalty is rewarded, despite evidence to suggest that isn’t the case.
Roughly one in five consumers – mostly older, lower-income, or less educated people – feel uncomfortable searching and switching online.
Price walking – or charging existing customers with an increasing amount over time – has been banned since July following a central bank review, but rebates for new customers are still allowed.
However, the central bank’s most recent analysis “revealed a significant loyalty penalty over time for customers who stayed with the same firm.”
“We find that policyholders who report that they have experienced a history of premium increases or significant savings when shopping are significantly more likely to commit and switch providers,” the letter reads.
“Policyholders who are short on time or who believe loyalty is rewarded are significantly less likely to engage and switch providers.”
The central bank found that “consumer misperceptions” and “consumer psychology” influence the propensity to search and compare prices and eventually switch providers.
The survey comes as insurers prepare to increase their rates over the next year.
Irish Life Health recently announced that it will increase the cost of its plans for those renewing or taking out a new plan from early January.
It is the first insurer to announce a price increase, with Vhi and Laya offering rebates earlier in the year – although experts expect the two insurers to raise prices in the new year.
https://www.independent.ie/business/personal-finance/insurance/misperceptions-mean-many-customers-are-not-switching-insurer-central-bank-42188160.html “Misperceptions” mean that many customers do not switch insurers – the central bank