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Jill Holland
By
July 27, 2017

Do Payment Methods Have An Impact At Renewal Time?

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The headline figures on shopping around at renewal have been high for a long time, but they have masked a big difference amongst different types of shoppers.


One example of this is the difference between those who pay annually, and those who pay monthly. 

The monthly payment model is lucrative for brokers and insurers alike with the extra charge to consumers higher than most credit card APRs.

 

Customers who pay monthly are also more likely to let their insurance renew automatically. There’s nothing like a looming payment of several hundred pounds to focus efforts of finding a better deal, meaning those who make a single payment shop more often. And behaviour shows a marked difference between home and motor insurance customers.

 

In the case of home insurance, those who paid annually were 16.5 points more likely to shop around in the last year than those who pay monthly by direct debit. Whilst motorists who paid monthly for their insurance were 6 points more likely to shop than those who paid monthly.

 

Motor Shoppers 

May 16 – April 17

Overall

83.9%

Single Payment

86.3%

Monthly Payment

80.2%

 

Home Shoppers

May 16 – Apr 17

Overall                    

75.1%

Single Payment        

 81.9%

Monthly Payment      

65.4%

 

The interesting question for brands whose business models rely on monthly payments is how the combination of price rises and publishing last year’s premium on renewal notices will affect those customers. 

 

Understanding customer behaviour at renewal time is key to planning retention and acquisition strategies. For example shopping around is also more prevalent amongst younger consumers, and older, affluent consumers, something measured by our Insurance Behaviour Tracker, including down to brand level.

 


 

Opportunities to win at renewal

With 84% of motor insurance customers shopping around for other quotes at renewal time there are plenty of opportunities for brands to win new business. This is also the time when retention strategies are put to the test with the threat of losing valuable customers. To be winners in the renewal game brands need strong retention and acquisition strategies.

 

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Our infographic highlights insights from our research on consumer behaviour at renewal and shows key factors at play in the renewal game.

 

DOWNLOAD INFOGRAPHIC


 

 


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