Wednesday, February 26, 2014

Price Matching - Consumer Obfuscation

You know when you ring your car/house insurance company and tell them that you have secured a cheaper quote, than their renewal, and they tell you that they will match the cheaper quote if you stay with them? Well, that's price matching and consumers are complicit in its growth as a way for insurers to gain and retain business.

It has slowly, but surely, made it way into the Life & Pension sector over the last number of years but regulators, consumer interest groups and advertising standards have ignored it. It's mainly in the term assurance market but is now standard practice, on annuities, for the largest insurer in the Country.

I have maintained that this practice inhibits competition and stifles innovation. It's the lazy mans way of pricing your product and not giving a toss about competing for business on product features.

If you're accepting business at a price lower than your book rate then you're effectively 'buying business'. I mean, why have 'rates' at all if you're just going to do it for the same price as your cheapest competitor?

Recently, Friends First held their hand up and admitted the following:

"We aim to do all we can to meet customers’ needs through offering high quality products at affordable premiums, ensuring transparent communication of charges and fees and providing unambiguous marketing literature. As a consequence, we have removed ‘price matching’ from our protection policies to improve customer transparency while improving the cost of our premiums at the same time.  You will now notice price cuts are across level and decreasing term products."

They've caught the bull by the horns and effectively blown the 'competition' out of the water by "doing all [they] can to meet customers’ needs through offering high quality products at affordable premiums, ensuring transparent communication of charges and fees, providing unambiguous marketing literature and rewarding them for long-term loyalty."

Answer that Caledonian Life, Aviva Life & Pension, Irish Life and New Ireland Assurance. NB : Zurich Life don't 'price pledge' and well done to them for not sinking that low.