Before the internet, I understand the auto insurance industry frowned upon those who switched auto insurance providers too frequently. Is this still the case? Or, have modern times made this a buyer’s market? Specifically, is it frowned upon to switch after 2 years, and does this factor this into your quote? The truth will set you free, good sales people!
IANAISP - Every carrier that doesn’t currently insure you would love you to switch, especially if you are just premium shopping. If your current insurance was cancelled because of DUI’s, multiple traffic violations and accidents, then not so much.
I doubt if it’s as simple as that. Every carrier would love for you to switch to them, but they would love it more if you’re the type who stays with your company for 15 years before switching, as compared to if you’re the type who switches every renewal.
I wouldn’t be surprised if they price accordingly. It’s a lot cheaper for them to service an existing policy than to sign up a new one.
Any insight as to why? Seems like the only difference is a few minutes of extra paperwork for a new policy.
Every time I’ve signed up for a new policy, it’s been more than “a few minutes”, and that’s only the time that the guy was on the line with me. There are other people working behind the scenes. Plus, some of the background research they do on your driving record and the like costs money too.
In addition, the company needs to attract new customers via advertising or agent expenditures. If you jump ship after 6 months, they have a short time to recoup these costs. Whereas if you just stick around without effort on their part, they can spread the advertising/agent fees over a longer period of time.
The difference is between their computer spitting out a new policy statement, perhaps by email, versus the entire multi-media advertising effort to attract 500 customers to click the website to have 10 of those people call a sales person to have the salesperson sell one person a policy after 30 minutes of hands-on phone work.
The cost difference is probably 1000:1. That’s what’s motivating the insurance company to try to keep you, and to vastly prefer sticky customers over flighty customers in the first place.
While I agree with what you’ve said, I think the OP is asking something more along the lines of, “is there some kind of built-in penalty (presumably by a higher rate quote) for someone who frequently changes insurers, independent of their driving or prior claims history?”
I agree that was the OP’s question. I was answering DrCube’s side issue that called the OPs premise into question.
As to the OP:
Clearly the industry as a whole would prefer sticky customers. Conversely, each company would like to poach as many other-vendor customers as they can. That’s an unstable equilibrium that tends to lead to discounting, customer churn, and all the rest. IOW, it’s more likely you’ll be able to get a discount for switching, rather than be charged a premium.
The mobile phone industry is instructive; they suffered terribly from mutual cannibalism of each others’ customer base. The poaching wars slowed down only when the industry consolidated enough that there were 3 players, not 15. Once there’s that few, they can all begin to slowly back away from cutthroat competition without being poached white. Soon enough they’ve reached a cosy oligopoly at much improved margins. Even without any overt (i.e. illegal) collusion.
Which uneasy truce lasts until somebody’s CEO gets greedy or somebody else hits a rough patch & needs extra cashflow, perhaps to finance an acquisition or a side business.
In that case, can someone explain why they jack my premium up every year,until I source an online quote from them that is almost the same or less than my current premium. Then, when I phone them up, they say “Oh! OK - we will match it then.”
Hope springs eternal … in the minds of insurers.
They hope you stick with them.
Introductory rates are deliberately low. They aren’t making money on most switchers early on.
Then your rates go up a bit. And then up a bit. Before you know it, it’s a lot cheaper to switch again.
We do this every few years. Never been an issue that we do. Not at all.
(Note that people who weren’t insured for a bit and then sign up for insurance are an entirely different kettle of fish. Track records count here.)
Yeah, this call them up and get them to match someone else’s price is quite common now for a lot of businesses. I have to do this every few months for one business or another. The discounts you can wrangle are sometimes amazing. But it’s a major pain.
OTOH, tried to do this with our insurance a bit back. They didn’t want to match so we switched.
Again in the UK - they use the roll-over ‘trick’. You have to sign up with a direct debit, even if you pay 12 months up front. If you miss the renewal notice (which they have to send by law) you get automatically renewed at whatever premium they decide. They can charge an admin fee if you then want to cancel.
This. There is no “frequent change” penalty. The rate they quote a new customer is based solely on actuarial considerations, rather than what sort of customer you are (other than a history of on-time payment). So long as you had insurance elsewhere before them, they don’t care.
The reason insurers love longtime customers is because they will typically renew without shopping around - and that means they can be charged more. I renew with Progressive every year because I just have to click twice. I get a small discount from the prior year. I could get a bigger discount by switching, but it’s not worth it.
I only found this policy true with Geico. Low rates at first and then they start going up.
I have State Farm for my auto & house. The rates go down every year for the auto (they should - the car is worth less every year and I have collision/comprehensive). I have Progressive for my many motorcycles and it goes down every year. I only carry liability on my motorcycles so I cannot explain why they would go down every year. However, they do list it as a discount for being a long-term insurer.
Guess who won’t be switching to Geico?