Why are more Aussies switching insurance since COVID-19?
COVID-19 has prompted millions of Aussies to be smarter with their cash and you could save too.
Aussies with car and home insurance policies have been far more likely to switch their insurance provider since the COVID-19 pandemic hit last year, according to new research from market research firm Roy Morgan.
"Nearly 9.7 million vehicle insurance policies were at risk of being switched to another provider and over 6.9 million household insurance policies," said CEO of Roy Morgan, Michele Levine.
That's almost double the levels of the previous corresponding year where "only 4.9m vehicle insurance policies were at risk of being switched and just under 3.7m household insurance policies".
"Of the nearly 9.7m vehicle insurance policies at risk of being switched most, 7.2m policies were ultimately renewed with the same company. However, this still leaves over 2.4m vehicle insurance policies that were switched, representing 7.9% of the 30m+ policies in the overall market," added Levine.
It was a similar situation in home insurance. While most of the 6.9 million at-risk policies were eventually renewed, a huge 1.5 million consumers switched.
Household financial budgets being squeezed
"The COVID-19 pandemic which hit Australia early in 2020 caused the country's first recession in three decades and has clearly led to substantial stress on household financial budgets despite the record amount of government stimulus spending designed to support the economy," Levine says.
"The big increases in Australians considering switching their vehicle and household insurance providers show that in times of uncertainty and potential financial stress, people are more likely to be on the lookout for the best deal they can possibly find to insure some of their valuable goods.
"These financial stresses present an opportunity for fast-moving insurance companies to tailor their product offerings to those looking for a better deal and potentially sign up a customer who is looking to adjust their insurance policies to better suit their changing financial circumstances."
Opportunities to save
It makes sense that record numbers of Australians have switched since the COVID-19 outbreak. According to insurance and finance expert;
It's one of the easiest ways to reduce your household bills.”
"Just by comparing home and contents insurance policies – you could save up to $1,653 per year by switching. Similarly, we found an average difference of $2,643 between two car insurance policies, so there are plenty of opportunities to save."
Additionally, it's a chance for Aussies to update their policy so they're only paying for what they need. Concerningly, more than a quarter (26%) of home insurance customers don't know what their policy includes. This means many Aussies could be paying big bucks for an insurance policy that doesn't suit their needs or no longer provides adequate cover.