More Australians are looking to shop around for a new insurance provider rather than simply renew their existing cover.
The majority of household Insurance policies are automatically renewed without approaching other insurers. However, there is an increasing trend to shop around prior to policy renewal, according to the latest findings from Roy Morgan Research’s General Insurance Industry Report.
In the 12 months to August 2012, 14% of households approached another company prior to renewal compared to 10% in 2008.
However, this increased trend to compare price before renewal is an indication that policy holders are increasingly price sensitive and as a result, some are deciding not to insure. More than half of all policy holders that shop around before renewing do so because of price.
The report, based on personal interviews with over 9,000 household insurance customers each year, also found home owners of all levels of income have turned their backs on household insurance during 2012 and created a deepening underinsurance problem.
One problem is, cheaper covers can be found but the cover can be greatly reduced. However, something is better than nothing. The proportion of Australian home owners holding a household insurance policy has declined from 92.2% in 2008 to 90.1% in 2012,
The adoption of household insurance is largely dependent on income, with the lowest being the under $15,000 pa households (83.9%) and the highest is the $100,000+ pa group with 93.7%. However, the decline in household insurance is across all household income groups.
Rising premiums and natural disasters including floods in particular have received publicity regarding the extent of coverage and the definitions used by the industry but price still remains the most important consideration.
Having an increasing trend for people to shop around at renewal time is a positive one providing consumers are aware of any change in terms and conditions. Our concern is that they do not.
You do get what you pay for. Balance price with the cover you need.