Avoid ‘sticky in­er­tia’ – look at your in­sur­ance poli­cies

Central Leader - - OPINION -

We’ve got loads of house, con­tents and car in­sur­ers right?

AMI, Vero, State, AA In­sur­ance, NZI and banks in­clud­ing ASB, ANZ and Bank of New Zealand. It’s a dizzy­ing choice. Ac­tu­ally, all those men­tioned above are owned by two Aus­tralian com­pa­nies.

AMI, State and NZI are all owned by IAG which also pro­vides the house and car in­sur­ance for ASB and BNZ.

Vero and the ma­jor­ity of AA In­sur­ance is owned by Sun­corp which does the house and car in­sur­ance for ANZ.

It feels a lit­tle like the su­per­mar­ket sec­tor where Food­stuffs has the New World, Pak ‘n Save and Four Square brands and Wool­worths has Count­down, Fresh Choice and Su­perValue.

But by the end of April we should learn whether IAG will be al­lowed by our com­pe­ti­tion author­ity to buy Lum­ley which does the in­sur­ance West­pac sells.

If the an­swer is yes, IAG will own the com­pa­nies pro­vid­ing 66 per cent of the house in­sur­ance in the coun­try and the in­sur­ance mar­ket will feel a lot more like the su­per­mar­ket sec­tor.

Those for and against the deal have been mak­ing their views known to the Com­merce Com­mis­sion and one, from the above-men­tioned Sun­corp, should come as a slap in the face for the ma­jor­ity of us.

Sun­corp op­poses the deal but one of the most dis­mal as­pects of its sub­mis­sion is its frank as­sess­ment of the so­phis­ti­ca­tion of we, the pub­lic, and our fail­ure to be­have as com­pe­tent con­sumers.

Sun­corp says when it comes to in­sur­ance, cus­tomers are quite ‘‘sticky’’.

What it means by sticky is that we get in­sur­ance and then we stay and stay and stay.

Eighty per cent to 90 per cent of us do not change in­sur­ance providers at their an­nual re­newal date.


Not only are we ‘‘sticky’’ but we suf­fer from ‘‘in­er­tia’’ or we feel trapped by our claims his­tory, or be­cause we bought all our in­sur­ance in one place to get a dis­count.

Many of us, I might add, are do­ing other stuff that can gen­er­ally be bun­dled un­der the um­brella of ‘‘liv­ing our lives’’: Over­work­ing, play­ing with the kids, help­ing them with the home­work, hav­ing a glass of wine and a chat, cook­ing din­ners, get­ting ex­er­cise, watch­ing TV, mow­ing the berms, etc.

And when we do over­come our sticky in­er­tia ‘‘most cus­tomers will shop by brand’’.

Some­one an­noyed by NZI for ex­am­ple, might de­cide to pick up the phone or get an on­line quote from AMI or State.

In one sense, en masse, we are out­ma­noeu­vred.

Businesses are run by pro­fes­sion­als whose fo­cus for eight and a half, nine hours a day is on mak­ing money from us, the masses.

They have sculpted their sales chan­nels in such a way as to max­imise the pre­mium they can get us to pay.

We just make it eas­ier through our sticky in­er­tia and to some ex­tent our sticky in­er­tia is a re­sult of how in­sur­ers sculpt their sales chan­nels.

But we can refuse to be part of the sticky in­ert 80 to 90 per cent.

All you have to do is when you get the an­nual re­newal no­tice in the post, pick up the phone and get quotes from in­sur­ers or go on to their web­sites and fill out re­quests for quotes.

You have to in­vest some time in it, ‘‘sig­nif­i­cant’’ time, Sun­corp says, which knows that shop­ping around is no speedy af­fair, es­pe­cially in a coun­try where on­line com­par­i­son web­sites and quote ma­chines have failed to ma­te­ri­alise.

That does in­volve do­ing a lit­tle less of the ‘‘liv­ing your life’’ but if you want to ex­er­cise your power as a con­sumer, you have no choice.

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