Avoid ‘sticky inertia’ – look at your insurance policies

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.

Why?

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.