Product category:
General insurance
News Release from: Defaqto | Subject: Home insurance
Edited by the Insidemoneytalk Editorial
Team on 15 June 2007
Loyal consumers penalised by home
insurance
Online cashbacks and discounts reinforcing message that 'cheapest is best', says Defaqto.
An ongoing price war in the home insurance market means that loyal customers are being penalised by providers, according to a new report from leading financial research company, Defaqto.In its report, 'Home Insurance in the UK' Defaqto reveals that rather than trying to extend cover and improve services to customers, many home insurance providers have launched a price war in an attempt to win business Increasingly they are offering large discounts and incentives to new customers, while continuing to charge the same prices to loyal customers
This article was originally published on Insidemoneytalk on 11 Apr 2007 at 8.00am (UK)
Related stories
Defaqto launches new Product Comparison Tool for home insurance buyers
Specialist insurer Hiscox pioneers the comparison tool, helping consumers compare policies on quality
Bonfire night beckons, but are you prepared?
As the season of bonfire night parties beckons, make sure you have home insuranceandnbsp; to cover any unforeseen events that may damage you or your neighbours properties warns Defaqto
New customers can earn cashback of up to £125 by applying through online cashback websites.
The average payouts from these sites is between £30 and £60 and has risen by around 60 per cent in the past year.
Customers with separate building and contents policies can end up paying very little for cover.
Further reading
Defaqto launches buy-to-let home insurance table on Aequos database
Defaqto has launched a buy-to-let home insurance table for the residential market on its Aequos online database.
Free banking could 'disappear within two years'
Defaqto predicts banks will switch to 'Pay As You Go' charges or flat fees for current accounts
Defaqto states that the growing popularity of broadband internet usage has changed the way people now buy insurance, particularly home and motor policies.
Consumers now have an enormous amount of choice and can easily compare prices online via web price comparison sites.
Previously customers got four or five quotes but now they can get dozens very easily.
Report author and Defaqto's Head of Insight, Brian Brown said: "It hardly seems in keeping with the FSA's rules for Treating Customers Fairly that two customers with exactly the same risks should pay markedly differing amounts for their policies.
It would appear that increasingly loyalty never goes unpunished and rewards are only available for the disloyal.
"It's clear that the rise of price comparison sites is forcing insurers to offer larger discount schemes to the detriment of sound underwriting discipline.
The rise in expensive home entertainment systems means that an increasing number of homeowners are likely to be underinsured.
As ever, customers need to check carefully the quality of cover that they are getting is adequate because cheapest is rarely best." Looking ahead, Defaqto believes that there will be growing pressure for home insurance providers to cover the cost of electronic downloaded information.
It says that within one to two years most major insurers will be offering some form of 'iCover'.
Some insurers may even look to provide data recovery services as part of a PC cover within the home insurance market.
Another issue which will have an increasingly important impact on the home insurance market over the next two to three years is environmentalism.
Defaqto believes that insurers will look at ways to encourage customers to be 'greener', and possibly tie green issues with customer loyalty.
Defaqto says that it will be interesting to see if any provider is prepared to offer a hybrid approach which would allow customers to find the lowest quote and then to make their purchase through a cashback website for even greater savings.
Ends For further information please contact the Sales Department on Freephone 0808 1000 804 or visit www.defaqto.com.
• Defaqto: contact details and other news
• Email this article to a colleague
• Insidemoneytalk Home Page
