Editor's comment: Time to reward loyalty

After donning life jackets, we swam out to the obstacles and faced the first challenge of getting onto the course with nothing but our own body strength to pull ourselves up. It was slippery, wet and awkward. Once on, we faced the repeated task of sliding, jumping or carefully edging ourselves across obstacles, which more often than not ended with us falling off into the water and attempting to once more get back onto the course and back in the race.  

It was exhausting, punishing and exhilarating all at the same time and, when the final whistle blew and we had to haul our tired bodies back to the beach, we returned with a few more bruises, scratches – and for the adults aches and pains – than we had started with. 

This was done in the name of fun but it’s not too far removed from what loyal customers currently face in the form of the ‘Dual pricing insurance total wipeout course’, when they attempt to renew their motor insurance each year.

The average customer who hasn’t faced a claim is reminded of their insurance only when that renewal letter is received, this year with last year’s price included, and inevitably there is a hike in premium.

Customers are actively encouraged to shop around for this compulsory class of insurance and they can’t be blamed for falling into the trap of being attracted to cheap first-year pricing deals. Once in the game, they are then sucker-punched with significantly increased prices a year later to pay for this practice. And if they don’t slide down another insurer’s low offer slide at renewal time because they are busy or forget to shop around, then they continue to pay higher rates and may face increases on their second and third renewal, rather than being rewarded for loyalty.

It’s a commonly known fact that attracting new customers costs more than retaining existing ones, so why does the industry persist in this ‘shameful’ practice that has earned them the title of ‘insurance pirates’?

Tesco and Amazon have proved using customer loyalty can be valuable for business. And for an industry that repeatedly claims the customer is at the heart of all it does, this is no longer good enough. The system is broken and it’s time insurers started to value their customers again or the summer of insurtech may prove to be their undoing.