“Too many Australians opt to pay the lazy tax and stick with their current insurer because they convince themselves it is too hard to switch,” he says.
The vast majority of insurance policy holders auto default year after year with the same insurer, even though the cost of their policy may continue to rise, according to market researcher Roy Morgan’s General Insurance Currency Report.
Over the past year, almost 80 per cent of the nation’s 38.7 million insurance policies were renewed with the same company, without the policyholder approaching any other provider, the research reveals.
A further 14.3 per cent of policyholders renewed with the same insurer after making an enquiry with another company, with just 3.9 per switching insurers.
And this apathy to shop around is growing. It is up from 77.3 per cent the previous year.
The most loyal customers, based on the proportion of policies renewed without an approach to another firm, are with RACV (85.5 per cent), Apia (84.6 per cent) and CGU (84.3 per cent).
It takes some time to read the fine print, but it’s totally worth it to save money.
Policyholders who do switch between insurers are motivated by either a bad claims experience, poor customer service, a better product elsewhere or a recommendation from a family member or friend, the research reveals.
Mr Newbegin says he learned from a young age that it is preferable to switch regularly if you want the best deal on your car insurance.
“Now I do the same across all of my insurance policies,” he says.
“You’ve got to be careful that you’re comparing apples with apples and it takes some time to read the fine print, but it’s totally worth it to save money.”
Blackburn says it is best to switch insurers when a policy comes up for renewal, as this will ensure you get the most value out of your old policy and avoid any possible cancellation fees.
“Get on the front foot – have a replacement policy ready before you cancel your current insurance, so you aren’t caught in between,” he says.
While comparison sites may be a good place to start when comparing prices and policies, consumer advocate Choice says you need to be aware they may receive commissions or a referral fee from the insurer if you sign up.
Call centre consultants, too, are incentivised by performance, receiving a higher bonus if you choose a more expensive policy.
When making comparisons, be sure to compare the fine print for exclusions, such as windscreen replacement on a car insurance policy, that might cost you more money in the long run.
It’s also worth taking a second look at your private health insurance policy, with recent government reforms that may have resulted in changes to your existing terms and conditions.
When switching health insurers, review the benefit limits for specific services, lifetime limits, extras cover, discounts and waiting periods. Make sure you check the Private Health Information Statement, which allows you to compare you cover.
As with all insurance comparisons – whether it be car, home, life or health – the trial is to do your own homework. The more time you take to shop around, the bigger the long-term dividends.
How to switch insurers
♦ Compare insurers, making sure to look beyond price by reviewing inclusions and exclusions
♦ Get a written quote from the new insurer
♦ Stipulate when cover will start
♦ Pay the annual policy fee in full or set up a monthly direct debit
♦ Contact existing insurer and cancel your policy. This can usually be done over the phone, but make sure you ask if you need to give notice in writing.
♦ Contact your bank and cancel direct debits to the existing insurer
♦ Check your bank statement to make sure new cover has started