Insurance is inherently necessary for most Australians. It’s likely you’ll hold an insurance policy to cover some or all of the important things in your life - health insurance, home and contents insurance, rental insurance, car insurance, life insurance, the list goes on. But how often do you review or switch insurers or policies?
The Australian Securities and Investments Commission (ASIC) has alleged that some insurance companies may be employing tactics to increase premiums for loyal customers before offering policy renewal discounts.
ASIC commenced civil penalty proceedings in the Federal Court last week, claiming some insurers used an algorithm to determine the probability of whether or not a customer might renew their policy at different premium levels.
The purpose of the algorithm was to allocate a smaller relative price increase to policies that were less likely to renew and a larger relative price increase to policies that were more likely to renew.
“Insurers should not promise discounts unless they are confident that they can and will deliver them in full. The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take enforcement action to hold insurers to account,” ASIC deputy chair Sarah Court said.
There are a number of reasons you may want to switch insurance providers. These can include but aren’t limited to:
Be aware that your insurance policy may automatically renew if you don’t cancel or switch providers.
When it comes time to renew your insurance policy, it may be advantageous to do some research and examine what alternatives are available. Using comparison tables, such as those provided by RateCity, could help you to see how your current policy and premiums stack up against other options.
Some insurers do offer legitimate benefits to reward customer loyalty, such as a no-claim bonus. While often associated with car insurance, some home insurers also award these concessions to policyholders that meet claim-free insurance terms. For instance, insurers may offer up to a 30% discount if you haven't made a claim in five years.
If you’re considering switching to a new insurer and they also offer a no-claim bonus, you might be able to transfer your discount by proving your no-claim history from the previous insurer through a certificate or renewal letter.
It’s vital to keep up with what you’re covered for and what gaps may exist in your current insurance policies. Insurers often update their terms and conditions for policyholders, meaning you might have thought you were adequately covered for particular incidents or losses but this may not be the case.
Certain events and incidents can void an insurance policy, so it’s crucial to be aware of your current policy details.
It may be sensible to compare the cost of your premiums from those you’ve paid in the past. Don’t be afraid to get in touch with your insurer and ask for a better price if you believe you can get a good deal elsewhere.
Many insurers offer special offers or discounts for new customers that could help you save money if you switch your service provider. You can also find bundled deals for all or some of your insurance policies at competitive rates.
This article was reviewed by Mark Bristow before it was published as part of RateCity's Fact Check process.
