No one wants to buy the same product for a markup at the supermarket, especially when the cheaper alternative may be just as good, if not better. Yet, the latest research from Compare the Market shows that almost one in four car insurance policyholders (22.5%) could be throwing away money by staying with the same insurer they’ve always had.
With car insurers flagging that premiums are likely to increase at renewal time, Compare the Market’s Economic Director, David Koch, spoke about the potential savings people may miss out on by sticking with the same insurer without comparing their options.
“Gone are the days where it pays to be faithful to companies. In fact, we’re seeing more incentives than ever before offered to new customers. We’ve seen this across the banking sector, where banks are trying to entice new customers to refinance, while even those who ask for a negotiated rate are getting better rates than those mortgagees who sit idle. It’s the same thing in the car insurance sector. The harder you look for a deal, the more likely you are to find it,” Mr Koch said.
“With so many choices and levels of car insurance available, it’s hard to understand why so many people are potentially throwing money away on higher premiums with their current insurer.
“By shopping around, people may be able to find a greater level of cover, for the same, if not cheaper, price point. There may be greater perks or discounts on offer, which could boost the hip pocket, especially with the current cost of living crisis breathing down our necks.”
|What people do when they get their insurance renewal||% Gen Z drivers||% Millennial drivers||% Gen X drivers||% Baby Boomer drivers|
|Stick with the same car insurance company as always||17.0%||14.9%||25.4%||29.7%|
|Chose based on family’s recommendations||30.9%||9.9%||4.7%||3.1%|
The survey also found that Baby Boomers were the most likely to stick with what they know, with almost 30% of the cohort stating they never stray from their car insurer. And as much as Baby Boomers may call Millennials the ‘switch and ditch’ workforce, this mentality may be helping Millennials save on their car insurance, as only 14.9% of the cohort stated they stay loyal to their insurer.
The research found that Gen Z was partial to choosing their car insurance providers based on familial recommendations (30.9%). While this may be a good place to start, it’s recommended that people review their own needs and what they may be able to afford. No policy is a one-size-fits-all, so something that may work for an established family might not work for someone starting university.
Compare the Market’s General Manager for General Insurance, Adrian Taylor, said there were things people need to consider when looking at car insurance, such as the underwriters of each company.
“There may be a misconception that all brands underwrite, or take on the financial responsibility to pay out policies if people claim on their policies. Yet in most cases, especially for most challenger brands, they are underwritten by bigger, more well-established companies, which may offer similar levels of cover for a lower price,” Mr Taylor said.
“And while people may feel a bit more comfortable paying more for cover from a well-known brand, there may be challenger brands in the space who use the same underwriter. And at the end of the day, it will be the underwriter who will look to pay out if there’s ever a claim made against a policy.
“In the current economic climate where every cent is under review, comparing the products on the market may help people find car insurance policies that are better suited to their needs at a possibly cheaper price point, without having to pay for brand faithfulness.”
*Compare the Market surveyed 1,004 Australian adults aged 18 and over in July 2023
For interviews and more information, please contact:
Noémi Hadnagy | m: 0433 377 252 | e: [email protected]
Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.