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Over nine million general insurance policies at risk of being switched – CGU and RACV top for loyalty

Source: Roy Morgan Single Source (Australia) Base: Aust Pop'n aged 14+, General Insurance policies, (excl Can't Say action) 12 months to March 2019: Sample = 127,167 policies
A new report from Roy Morgan, ‘General Insurance Industry Market Overview Currency Report’, shows that during the last 12 months, 9.4 million general insurance policies, or nearly one in five (19.1%) were subject to review. This was made up of the policies that were switched to another company and those that were renewed with the same company after approaching other companies. Companies with the most loyal customers (% who renew without looking around) are CGU and RACV; ahead of RACQ, CBA, Apia and Suncorp.

These are some of the latest findings from Roy Morgan’s ‘General Insurance Currency Report’. This report is derived from Roy Morgan’s Single Source Survey (Australia) which is based on in-depth personal interviews conducted face-to-face with over 50,000 Australians per annum in their homes, including details of over 120,000 general insurance policies.

Most general insurance policies renewed automatically

Over the last year, more than three quarters (78.4%) of general insurance policies were renewed with the same company without approaching any other companies. This was an increase from the previous year when it was 77.5% and currently represents 38.3 million policies.

The following chart shows the action taken by all existing general insurance policy holders over the last year and the dominant position of automatic renewals (78.4%), compared to 14.9% renewing with the same company after approaching other companies and 4.2% who changed companies. Those taking out this type of insurance for the first time accounted for 2.5% of current general insurance policies.

Action taken with current general insurance policies in the last 12 months
 
Source: Roy Morgan Single Source (Australia) Base: Aust Pop'n aged 14+, General Insurance policies, (excl Can't Say action) 12 months to March 2019: Sample = 127,167 policies

Major variations in general insurance company loyalty

The most loyal customers, based on the proportion of policies that are renewed without the holder approaching another company, are with CGU (85.8%) and the RACV (83.5%). Both of these companies are well above the industry average of 78.4%. The least loyal customers among the majors are with YOUI (only 70.6% renewed without looking around), AAMI (73.3%) and GIO (73.7%).

Loyalty - Renewed general Insurance policies in last 12 months without approaching another company - 12 largest general insurers1

Source: Roy Morgan Single Source (Australia): 12 months to March 2019, n = 127,167 policies. Base: Australian's 14+ with general insurance. 1. Based on policy numbers. 2. Includes brands not shown.

Norman Morris, Industry Communications Director, Roy Morgan, says:

“Although the clear majority of general insurance policies are automatically renewed with the same company, there are risks and opportunities as a result of around one in five policies being subject to review at renewal time. The number of policies being considered for change over the last 12 months was 9.4 million, an increase from 8.3 million from five years ago. The number of general insurance policies actually being changed to a different insurer over the last year was 2.1 million, down from 2.7 million in 2014. It appears that more people are looking around at renewal time but fewer are actually switching.

“To maximise the marketing opportunities presented by the large number of switchers and considerers it is important to understand why policy holders move or at least look around. Our research shows that general insurance policy holders primarily say that they change companies or shop around due to issues relating to better premiums. Our understanding of why people shop around goes well beyond cost and looks at other issues that motivate them, such as bad claims experience, purchase of a new car, poor customer service, better product elsewhere and recommendation by a family member or friend etc. A full list of issues is available at the company level to achieve an in-depth understanding by accounting for differences between insurers.

“The data highlighted here covers only a small part of what is available from Roy Morgan on all types of general insurance and all other types that can be trended over many years. To find out more simply ask Roy Morgan.”


For comments or more information please contact:
Norman Morris, Industry Communications Director
Office: +61 (03) 9224 5172
Norman.Morris@roymorgan.com


About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

1,000

±3.0

±2.7

±1.9

±1.3

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2