The practice of auto-renewal in insurance has attracted a lot of media coverage, not least because of the stigma attached to it. The industry has not fully mitigated consumer concerns regarding the lack of transparency in auto-renewals, particularly relating to loyalty pricing, which leads to a race to price comparison sites.
While many policyholders end up sticking around with their existing insurance provider at renewal, shopping around for an alternative deal is common – more so using price aggregators.
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According to GlobalData’s UK Insurance Aggregators 2019 report, consumers holding motor insurance policies are the most likely to use price comparison sites around the renewal date, with 63% of respondents in the UK having done so in 2018. Moreover, this proportion has increased year on year since 2016. Pet insurance policyholders are also using price comparison sites more at renewal than before.
In the UK, the Financial Conduct Authority is taking measures to improve auto-renewal transparency, engaging with the industry in a series of proposals and consultations. In a recent move, aggregator GoCompare has called for a five-point plan to solve the problems surrounding loyalty pricing. Its key suggestions are extending the cooling period, increasing communication, and improving transparency across all customer touchpoints.
Whether GoCompare’s suggestions are enough to improve customer retention at renewal remains to be seen. Traffic on comparison sites is largely driven by increasing premium costs, which can either price customers out of auto-renewals or simply encourage them to look for a better deal. New regulation requires insurers to inform consumers of their current premium price at renewal, which is likely highlighting any increases to their premiums. And insurers should certainly put greater effort in to improving their auto-renewal strategies and overall customer satisfaction.
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