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Is Loss Leader pricing unethical and should it be addressed

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Is Loss Leader pricing unethical and should it be addressed

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We all receive auto-renewal quotes for annual policies such as house/vehicle insurances, mobile phone contracts etc and most of us are aware that, as most companies entice us in with heavily discounted premiums in year one (in effect a Loss Leader), the renewal quote will be much higher than taking out a new policy. As a result we know to obtain new quotes for the service (even from the same supplier) and in most cases not to allow auto renewal to proceed.

However I believe that this practice of Loss Leader pricing followed by significantly higher renewal pricing is unfair and takes advantage of those who may not have the time or wherewithal to consider that auto-renewal may cost them significantly more than taking out a new policy.

As such I would like to see companies giving auto-renewal quotes which include the price and option for a new customer policy, allowing customers to choose between new policy at a lower price or auto-renewal to gain "loyalty" benefits.



  • sharpe106sharpe106 Forumite
    3.5K posts
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker

    I doubt very much when you get an original insurance policy it is a loss leader or even discounted, they just make it look like that, bit like DFS and their sales. They will still be making money out of it. The unethical part is them then charging extra for people that don't switch.

  • spanish_inquisitionspanish_inquisition Forumite
    38 posts
    Seventh Anniversary 10 Posts Combo Breaker
    Sadly many policy owners only find out how good their insurer is when they make a claim. Insurance is designed to provide financial protection when things go wrong, but it seems some insurers view this as an inconvenience to hit the bottom line. Unfortunately with this 'misguided strategy' the only way is to shop around when the times comes. Essentially the insurance market stinks.
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