Australia:More Aussies switch insurers since COVID-19

Since the COVID-19 pandemic began, Australians with either vehicle insurance (a market of 30m+ policies) or household insurance (a market of nearly 25m policies) have been far more likely to switch their insurance provider, and also far more likely to consider switching after looking for deals from other companies, according to findings made by Melboune-headquartered market research firm Roy Morgan.

Ms Michele Levine, CEO of Roy Morgan, says in a statement that since COVID-19 up-ended the Australian economy in early 2020 there has been a significant change in how Australians view their vehicle and household insurance policies with far more considering switching providers. She said, “The latest Roy Morgan data on vehicle and household insurance policies shows that in the year to March 2021 nearly 9.7m vehicle insurance policies were at risk of being switched to another provider and over 6.9m household insurance policies were similarly at risk.

“These numbers are a significant increase from a year ago and nearly double the comparable figures in the pre COVID-19 period. In the year to March 2020 only 4.9m vehicle insurance policies were at risk of being switched and just under 3.7m household insurance policies.  “Of the nearly 9.7m vehicle insurance policies at risk of being switched most, 7.2m policies, were ultimately renewed with the same company. However, this still leaves over 2.4m vehicle insurance policies that were switched representing 7.9% of the 30m+ policies in the overall market.

“These trends were replicated in the household insurance market with most of the 6.9m at risk policies, numbering 5.4m, eventually renewed with the same company. This does leave over 1.5m household insurance policies that were switched – a significant increase on a year ago. “The COVID-19 pandemic which hit Australia early in 2020 caused the country’s first recession in three decades and has clearly led to substantial stress on household financial budgets despite the record amount of government stimulus spending designed to support the economy.

“The big increases in Australians considering switching their vehicle and household insurance providers shows that in times of uncertainty and potential financial stress people are more likely to be on the lookout for the best deal they can possibly find to insure some of their valuable goods. “These financial stresses present an opportunity for fast-moving insurance companies to tailor their product offerings to those looking for a better deal and potentially sign up a customer who is looking to adjust their insurance policies to better suit their changing financial circumstances.”

Switching

In the year to March 2021 only 62.9% of the 30m+ vehicle insurance policies (including Compulsory Third Party (CTP) were renewed without even approaching another company, down from 77.9% in the year to March 2020 – prior to the pandemic. This was a drop of 15 percentage points in a year dominated by the pandemic.

There was a significant increase in vehicle insurance policies that were renewed only after approaching other companies, up 9.2% points to 23.5%. In addition, vehicle insurance ‘switching’ nearly doubled to 7.9% of all vehicle insurance policies, up 3.6 percentage points from a year ago while 5.8% of vehicle insurance policies were taken out for the first time, up from just 3.5% pre-COVID-19. There was a similar trend in the household insurance market.  A majority of 68.1% of these policies were renewed without approaching another company, down 12.3% points from the year to March 2020 when 80.4% of household insurance policies were thus renewed.

Over a fifth of household insurance policies, 22%, were renewed after approaching other companies, up 7.7 percentage points from a year ago, and 6.1% of household insurance policies were ‘switched’ from another company, up from 3.7% a year ago pre COVID-19. A small proportion of 3.8% of household insurance policies was taken out for the first time, compared to only 1.6% pre-COVID-19.

The findings are from Roy Morgan’s Single Source insurance data derived from in-depth personal interviews conducted with over 50,000 Australians per annum, including details of over 75,000 vehicle insurance policies and over 65,000 household insurance policies.