Aviva has responded to customer expectations by removing all interest charges and penalties on their AvivaPlus product when paying monthly. Few insurers have taken this step which is normal practice when purchasing a lot of consumer products so will be seen as an attractive differentiator for those who prefer to pay monthly.
Aviva scraps interest charges
The AvivaPlus product will be rolled out in December 2018 for personal home and motor insurance. It is a monthly subscription model, similar to what customers are used to from providers such as Spotify and Netflix. Insurance is one of very few purchases which leaves customers facing large one-off annual payments, with even furniture companies offering interest-free monthly payments. As it is already seen as a grudge payment, particularly for motor insurance as it is a legal requirement, this is especially poor for customer satisfaction.
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Individual insurers have perhaps got away with it in the past, as none of their competitors have offered a monthly service, so it will be interesting to see how Aviva’s competitors react to this service. It is difficult to imagine customers continuing to willingly purchase cover in large one-off payments when this model is available from a mainstream provider.
The product has several other features, including a key trend in personal insurance at the moment, in simplifying policy language and reducing the amount of questions asked, and consequently, customer’s time used. It also offers price parity assurances, namely that new customers will not receive preferential treatment, so existing customers will not be penalised for their loyalty. It also offers three tiers of cover and allows customers to switch between them without incurring a cost. This means that a customer can upgrade cover in particular months where they may feel exposed to a higher level of risk.
Overall, the platform is designed to make the process easier for customers, with more manageable payments and increased flexibility the key benefits. The public generally have a very negative view of insurers, with a lot of mistrust and a feeling that any extra service will lead to additional costs. AvivaPlus looks like being a significant step in starting to change these perceptions, for Aviva at least.
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