Many insurance customers still believe they will be rewarded for remaining loyal to their insurer

Time-poor consumers were also less likely to switch their policies.

Thu, 01 Dec, 2022 - 16:16

Alan Healy

Significant numbers of car and home insurance customers still believe they will be rewarded for being loyal to their insurer despite incurring penalties by staying with the same firm over time.

A new study from the Central Bank has found that one in four private car insurance customers and one in five home insurance customers believe that loyalty is rewarded by companies when the same review found that this was not the case. The Central Bank has banned the practice of insurance companies charging loyalty penalties over time but companies are allowed offer discounts to new customers.

Their research based on a survey of 5,500 insurance policyholders found that four in five customers to engage with their insurer as renewal times with one on four switching providers.

Ireland's switching rate is slightly lower than the UK (35%) but higher than the European average of 16%.

Around one in five consumers are uncomfortable searching for and purchasing financial products online. The study found these tend to be older, lower-income and less-educated consumers. Time-poor consumers were also less likely to switch their policies.

The authors of the report said the results underscore the importance of digital literacy initiatives in mitigating against the risk of digital exclusion in financial product markets.

They said the survey highlights the role of consumer psychology in creating obstacles to switching and said consumer protection policies should take consumer psychology and insights into account.

"The Central Bank expects firms to take account of such factors as part of their efforts to support consumers in making fully informed decisions," the report states.