More than three quarters (77.4%) of general insurance policies were renewed with the same insurer without approaching any other companies over the 12 months to September 2018, according to a new study from the market research firm Roy Morgan.
This is down marginally from 79.3% recorded five years ago (2013) and is evidence of only a gradual change in buyer behaviour in this highly competitive market, the firm notes in its “General Insurance Currency Report”.
This report is derived from Roy Morgan’s Single Source Survey (Australia) which is based on in-depth personal interviews conducted face-to-face with over 50,000 Australians per annum in their own homes, including details on over 120,000 general insurance policies.
More policies subject to review but less switching
Some 9.8 million or nearly one in five (19.8%) general insurance policies were subject to review over the last 12 months, an increase from 17.7% in 2013. The current figure of 19.8% is made up of the 15.1% of policies that were renewed with the same company after approaching other companies and the 4.7% that actually changed companies. The overall result regarding the change in the level of switching over the last five years has shown a small decline from 5.8% to 4.7%, despite an increase in policyholders looking around.
The most loyal customers, based on the proportion of policies that are renewed without the holder approaching another company, are with RACV (81.7%), RAC (81.6%) and RACQ (80.8%). These companies are well above the industry average of 77.4%. The least loyal customers are with Budget Direct (60.8%) and Youi (70.3%).
Since 2013, the only companies showing improvement in the level of their customers’ loyalty were Youi (up 15.3 percentage points) and Apia (up 3.7 percentage points). All other companies among the 12 largest, showed declines in customer loyalty.
Mr Norman Morris, Roy Morgan's industry communications director, said, “This analysis has shown that despite the fact that the clear majority of general insurance policies are automatically renewed with the same company, there are risks and opportunities as a result of around one in five policies being subject to review at renewal time. The number of policies being considered for change over the last 12 months was 9.8m, an increase from 7.9m five years ago. The number of policies actually changing insurers over the last year was 2.3m, down from 2.6m in 2013. These large numbers represent major marketing potential and as a result it is important to understand why policy holders move or at least look around.
“Our research shows that general insurance policyholders primarily say that they change companies or shop around due to issues relating to better premiums. Understanding why people shop around goes well beyond cost and looks at many other issues that motivate people to look around or switch.”