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The annual home insurance dance - Or - how to rebuild consumer trust

I renewed my home insurance over the weekend. I do it every year, of course, and every year it is pretty much the same.

Here is how the conversation typically goes:

Ins Co: (automated voice) Your call is important to us. We're experiencing unusually high call volumes at the moment, so it may take us longer than usual to answer your call.

Me: (under my breath) You're always experiencing 'unusually high' call volumes. Maybe you should start to call this level of call 'usually high' and staff your call centre processes appropriately. On the other hand, if you're process worked properly, I wouldn't need to call you and  we wouldn't be here in the first place.

Ins Co: (answering the call quite quickly, leaving me wondering why they'd wound me up about having to wait a long time first place!) Hello, this is ..., how can I help?

Me: I've received your renewal quotation, and I'd like to not accept it.

Ins Co: (after completing ID&V) Of course. Do you mind if I ask why?

Me: Because it is much cheaper (16% this year) to take out a new policy with you than it is to accept your renewal.

Ins Co: Oh. Would you like me to see if there is anything I can do to reduce your renewal?

Me: No, don't bother thanks. You try every year and even though you do reduce it, it is always still higher than the new policy cost. I don't know why you don't give me your best price in the first place? Anyway, I've taken out the new one already over the internet, so can we please just not renew the old one?

Ins Co: OK, that's done now, is there anything else I can do for you?

Alright, that's not the exact conversation. I am less blunt than that with the operator. I know it is not her fault.

But a simple renewal has been turned into a much more complex cancellation and new policy, with a phone call and twice as much paperwork and postage. Why I can't do the cancellation over the internet (perhaps you can, but I couldn't figure it out) and why there is any paper and postage involved in this day and age is a completely different question. The whole process is quite simply annoying.

So why do I stay with this insurer? Quite simply because, hassle factor included, it is still the best deal I can find (every year, I cross check the deal with a few other insurers).

Now I am pretty sure I know what is going on here. By taking out a new policy, I benefit from a much more attractive rate designed to attract new business. The renewal, by contrast, is much more expensive as the insurance company is relying on customer apathy to claw back the profits they sacrificed in the first year, despite the fact that a renewal must surely be cheaper to process than a new policy.

And I am guessing that enough people simply accept the higher priced renewal to make it worth the insurance company's while. I also suspect that, because I take out a new policy with the same insurer every year instead of renewing, that they make much less profit from me as a customer than they otherwise would.

It is a process which is broken on many levels. As a customer I face two choices: (1) pay more than I need to at renewal, or (2) go through a convoluted and annoying cancellation and new policy process. Neither options seems like a win from my perspective.

I've been with the same insurer for many years now. I should be a loyal customer - even an advocate. Instead, I tolerate them grudgingly.

As an industry, we spend a lot of time talking about rebuilding consumer confidence and trust. It is in fixing broken processes like these that we need to start.
photo credit: BAM BAM via photopin (license)

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