Ethical insurance. The ultimate oxymoron?

Harvey_Scarratt

My wife and I recently received a renewal notice from Zurich for our Home and Contents policy, which weighed in at £1039.92p p.a. My wife has had the policy (originally with Alliance and Leicester) since she bought the house in the 1980s. Yes, we are of a generation which has not previously thought seriously about 'shopping around' despite the constant exhortations of my wife's son. We simply assumed that this sort of figure was the norm until I spoke to a friend , whose jaw dropped. He was paying under £200 a year with Saga.

I went on line and through this website found that, for very similar cover to that which we currently have, forty six providers provided quotes ranging from £141 to £402 with only 'Peacock' coming remotely close to the Zurich quote at £911 - and even that was more than £100 less than Zurich!
What was even more galling was the fact that Zurich's own online quote was £261, including 'free cover away from home' - that is nearly £800 less than we were being asked to pay.We spoke to Zurich who seemed surprised that other online quotes were 'so low' and indicated that, yes, there were discounts to be had on line. To the tune of £800?! However, she was unable to explain why our existing quote was so high. My wife pointed that we live in a modest 4 bedroom house with the normal contents you would expect in such a house.
What is disappointing is that in all the years my wife has been insured by Zurich (or its predecessors), no mention has ever been made of possible discounts on line; no mention has ever been made that there were cheaper deals available through Zurich itself, which at best shows a complete lack of integrity and at worst borders on deception. Sadly, we seem to be living increasingly in a society where ethical decay, whether among our financial institutions or political systems, is the norm.
Suffice it to say that we have not renewed our policy with Zurich. Their reply to my letter asking for an explanation as to how there could possibly be such a huge disparity between their own online prices and what we were being asked to pay , was far from satisfactory. There was no explanation for the disparity in costs other than 'Premiums in the market for any risk do vary considerable reflecting different Underwriting experience and costs and products across the market'. The -unsurprising - irony is that in the Complaints Procedure leaflet they sent us, they say, 'We are dedicated to our customers and seek to do what is right....' So that's okay then!
A harsh and costly lesson learned! I shall continue to press for an explanation and take the matter as far as I can in my efforts to understand how ethics and customer service can fit together.
Any comments?

dunstonh

However, she was unable to explain why our existing quote was so high.

They are not trained to. However, any broker or adviser would be able to. You almost certainly had a sum insured policy where you listed items and amounts that you wanted cover (beyond a base amount). Most internet/phone based plans are bedroom rated and cheaper for properties under 5 bedrooms (standard build, nothing special/difficult to insure).

What is disappointing is that in all the years my wife has been insured by Zurich (or its predecessors), no mention has ever been made of possible discounts on line;

Its not the job of Zurich to do that.

no mention has ever been made that there were cheaper deals available through Zurich itself

again, not the job of zurich to do that.

which at best shows a complete lack of integrity and at worst borders on deception.

No it doesnt. Many of things you want Zurich to do are things you would ask a broker to do (or intermediaries). Zurich are not brokers and therefore will not do those things. Some brokers will pro-actively review each years premiums and let you know if something better exists (mostly the old high street based brokers). Internet brokers rarely do that and let you stay on what you have. Intermediaries will also fall into both camps. If the broker is tied or limited panel will often have no choice but to leave you on the plan.

And of course, if you buy yourself without using a broker or intermediary, you effectively take on that role and therefore it is your responsibility to shop around and no-one elses.

How did you buy the original Zurich policy?

glider3560

Zurich will match their own online price anyway for most customers at renewal, but only on request.

The thing to remember is that you are free to take your business wherever you want. E.g. if Tesco's baked beans are too expensive, you can always buy them in Asda. Same with insurance, if Zurich's policy is too expensive then you can go somewhere else.

dacouch

I suspect you are on one of the very old Zurich Policies that does not include discounts for your age and no claims discount etc etc.

Does your policy schedule or booklet say that it is a "Solutions" policy?

Quote

Harvey_Scarratt wrote: »

Any comments?

It seems to me that your beef is the fact that you've been overpaying for insurance for a few years. I'm sorry to hear that, but it's down to you, not anyone else.

Insurers aren't charities. They've offered you a premium in the past, for cover, and you've accepted it. It's no different to my mortgage provider writing to me and telling me my fixed rate term is finishing and what my new payments will be - but not necessarily giving me the best deal. Financial institutions aren't mind-readers. They don't know what you want unless you ask them. It's all about communication.

So stop moaning.

Armengar

Ignore the people on pedestals. They seem to forget that not everyone is as savvy as them and some people dont remember going to a companies office almost begging them to take your business (certainly if you had a zurich policy circa early 1980's then im sure you will understand). Welcome to MSE (I see it is your first post).

Unfortunately gone are the days when companies actually wanted to retain you as a customer. They would prefer new customers as their internal metrics are more geared to new business than retaining old business (in the commercial market things work slightly differently). Plus if you have an old style cover you may find newer cover is actually better in your favour. Check the print.

As you have found out a simple check or two will yield better results.

In all honesty though, a broker has (historically) been a better place to do business as they are the people who know inside tricks and the people to get prices from, although in the modern internet world people can become their own brokers and cut out the brokers fee too.

Quote

Armengar wrote: »

They seem to forget that not everyone is as savvy as them ...

Do they?

Armengar wrote: »

Unfortunately gone are the days when companies actually wanted to retain you as a customer. They would prefer new customers as their internal metrics are more geared to new business than retaining old business (in the commercial market things work slightly differently).

Please explain this.

Thanks in advance.

Armengar

Yes. This forum is called the moneysavingexpert forum. I have an opinion just as anyone else does. I felt that the tone towards a newer poster who (IMHO) was a newcomer to the spirit of moneysavingexpert was pretty harsh and negative and a tad on the misleading - hence my post. Is that wrong of me to be "nice"?

Plus, easily explained; Whenever I get a renewal quote from *any* insurance company that I have used including but not an exhaustive list: cornhill, axa, NU, prudential - and brokers: RAC, AA, Endsleigh they have *all* said words to the effect of the following:

"We can assure you that this is the best price we can offer you"

Then why can I get a better price by using your own website - even if there is a 10% new customer bonus or webbonus stated it is still cheaper without said bonus. To be fair, the odd few companies do add at the bottom that due to changing factors there may be a better offer if you ring them - but again not all say this either (and I do not ring the companies so I cannot say with hand on heart if they actually do try to match their own prices)

This simply means that most of the time they do not value your existing custom. They already have your details on computer, the quotes are generated automatically therefore should cost just the same as an automated webquote using the same details.

Also (I may have you confused with someone else - appologies in advance) I believe you are in the insurance industry? Then you will know full well that the marketting metrics are far higher than retentions. This is standard industry practice, customer retentions are always marked down over customer aquisitions. Progress meetings are always about new business not retaining old business. It is about going forwards. If you believe any different (or your company behaves differently) then I suggest it is you that needs to provide examples as I suspect it will only be an extreme policy that cannot be beaten on renewal.

edit: I do not wish to get into a wee-wee contest. Afterall if the companies cared about retentions then a quarter of this forum would be nullified.

dunstonh

Plus, easily explained; Whenever I get a renewal quote from *any* insurance company that I have used including but not an exhaustive list: cornhill, axa, NU, prudential - and brokers: RAC, AA, Endsleigh they have *all* said words to the effect of the following:

"We can assure you that this is the best price we can offer you"

Then why can I get a better price by using your own website

They are saying thats the best price that distribution channel can offer you. The internet is a different distribution channel. Economies of scale can mean that you get one price through one distribution channel and a different price through another.

For example, like most IFAs, I am an intermediary (not a broker). That means I can use a number of sourcing engines to place insurance. I can get identical policies from the same provider at two different prices by using different sourcing irrespective of marketing discounts. That suggests that one source places more business with that company than the other and gets better terms for it (or they negotiated better or the sourcing broker doesnt take as much in their cut).

Also, when sourcing you tend to find a basic set of questions asked that give you a price that shows all the providers. When you then get an individual quote, you can often bring that price down further as there may be options that were not available on the initial bulk quote that could improve pricing. We have seen posters here mention that with internet quote portals as well (no surprise there as many are just front ends to the same or similar source engines).

Also, you can get different versions of product. You may see two Legal & General plans but they may be different versions.

At the end of the day, the old Zurich policy is assigned to a broker/intermediary. It is up to that broker or intermediary to inform the client if the policy can be beaten or not depending on their business model (i.e. is it pro-active or re-active). Zurich cannot go direct to client and say they have better as it bypasses the broker/intermediary.

molerat

Perhaps the OP should also explore the value of cashback sites such as Quidco etc :money:

If I had a renewal quote like that drop on the doormat I would sue the postie for making me choke on my breakfast. :eek: Last year my policy for a 3 bed detatched (buildings and contents) was £180 less £80 Quidco and I always use the leading companies as I was caught out a few years back with a motor policy.

dacouch

Insurance (like any business) is all about retaining existing customers, the rentention rate(The percentage of customers who renew) for a broker for motor insurance would be in the region of 80% to 90%. New customers are not profitible as you have all the set up costs in the first year and probably make nil or a nominal amount. The profit comes in the later years when there is less work / aquisition costs.

The same principle works with Insurers, its just that in the current market Insurers are competing to gain new customers and often gain them at a loss. It will get to a position where the new customer discounts will disappear or greatly reduce and also the amount of providers will reduce. This is partly why the Insurers are so hell bent on gaining new customers, they want to obtain critical mass so they will remain in the market and start gaining economies of scale.

When an Insurer or a broker buys another company they do not base the purchase or price on the potential to gain new customers. The main reason they buy the business is to gain a book of existing customers.