Do you know how your insurance is calculated, or why the price can change? Research by Co-op Insurance has revealed that most of us don’t, so James Hillon of Co-op Insurance explains what they’re doing to end the confusion.
Here at Co-op Insurance we recently commissioned some independent research and found that two thirds of consumers find general insurance too confusing.
What’s more, almost three quarters don’t think their insurer tells them enough about how the money they pay for their insurance is used. For example, whether it’s used for paying out claims, how much of it goes towards tax, or why the price of insurance may change annually.
Clearing things up
These findings show that people do have an appetite to know more, something that the Financial Conduct Authority and other consumer bodies (including Which?) have already highlighted.
As a business that is owned by members, we’re committed to improving transparency and are keen to champion a better kind of insurance. We want to provide peace of mind to members, customers and communities.
How does home insurance pricing work?
We recognise that the insurance sector can do more to make it easier for people to understand why buying insurance is important. We can also help individuals make informed choices when it comes to the type and level of cover they buy. So that’s why, as part of a new pilot scheme, we’ve developed a tool which explains how home insurance pricing works.
So far, around 10,000 of our home insurance customers have received a guide that uses a range of digital diagrams to explain how insurance premiums are calculated. It shows how much different claims can cost and how often they are made. As more than a quarter of people don’t understand why the price of insurance may vary from year-to-year, importantly, it also clearly explains the reasons why premium prices can fluctuate annually.
How could you understand insurance better?
We’re listening to customers’ views on this tool, and using it to shape the tool for the future. To date, the feedback we have received shows the majority of customers have found it useful. A number of insurers have expressed an interest in the tool as well.
It’s important to engage with customers on an ongoing basis, not just when they make a claim. So, we’re looking at options to explain how insurance pricing works in more effective and easy to understand ways.
Focussing on fairness and simplicity is also key and we think our new guide is just the starting point on the journey to improving transparency – but it’s an important step in the right direction.
We’d love to hear your thoughts on our insurance pricing tool – do you find this kind of tool helpful? What else would you like to see to help demystify the cost of insurance?
This is a guest contribution by James Hillon, Products and Pricing Director at Co-op Insurance. All opinions are James’s own, not necessarily those of Which?