Is Insurance Selling an indication of how travel selling online may go?

We live in a world of ‘Price Match’ from John Lewis’ ‘never knowingly undersold’ to walking into Curry’s and comparing the fridge you are buying with AO.com and have Curry’s match the price it seems that retailers are keen to price match. Travel is no different and most travel agents will try their hardest to either match or even beat quotes from competitors.

In the online world, travel is the most dynamic sector but when it comes to maturity, you could argue that the Insurance industry has carved the way ( remember when high streets were full of insurance brokers?) and is a step ahead and perhaps showing the way for how travel will be sold in the future?

Like many consumers, I have insured my cars through the same insurer every year. A few years ago I will have searched for the best deal and then renewed each year without bothering to price check ( I know !). In reality the premium either stayed the same or rose slightly and as a result I didn’t take as much notice as I should have. That was until my daughter came onto the policy for our 2005 Fiesta. Amy is taking a 10 weeks to travel to New Zealand and so it seemed sensible to take her off the Privilege Insurance as it was still over £1000 per year for the Fiesta as she is 18 and a young driver.

Calling Privilege we were advised that we would be charged an admin fee of £52 to take her off the policy and put her back on 10 weeks later and she would lose 1 year no claims as a named driver. It would cost us £80 net for the 10 weeks extra if we just left her on the policy and she would not lose her ‘history’ which helps premiums ongoing. More pertinent was that the insurance cost left with her off the policy seemed to be about £100 more than we used to pay pre her driving.

So we had a quick google, as you do. Shockingly we found that we have been overcharged by Privilege by £500 in comparison to other insurers such as LV. Not only that, our other car was similarly 1/3 over charged in its premium.

So a phone call to Privilege to establish just what was going on – surely we were valued customers? We have our cars insurance and house insurance with them and it feels that as a loyal customer we ought at the very least to be looked after and price matched ( even our electricity supplier writes to us when they find a competitor cheaper to let us know and have the option of changing).

What was the Answer from Privilege? You need to price match every year on a price comparison website. Full Stop.

OK – fair enough, we have not been on it. We will in the future. Will you however price match ?

NO

Really – not at all?

NO

So you are happy for us to leave you, with all our no claims history and take all our insurance policies with us?

YES

Really?

YES – we can’t help you.

So what has happened here is that the respected Insurance Broker has defaulted to the least cost price finder via GoCompare and the like online. They get paid for showing customers what policy they can buy and from whom for the cheapest price and the Insurance industry has decided to send even more business to them ( and pay for the referral) by not implementing any sort of retained customer loyalty programme.

Why is this? Why is Insurance the only marketplace where customer loyalty stands for nothing?

Perhaps it is the might of the online giants like GoCompare. Perhaps the Insurance market has worked out it is not worth the admin fee and internal resource to build a business model based on customer service and client loyalty? Perhaps it is just easier and more profitable to accept that GoCompare and the meerkats have sewn up the market and the insurers play second fiddle to them? It does look like a broken market from the perspective of the insurers. Since when has it been cheaper to acquire a new customer than keep an old one?

So how does this impact travel? Perhaps a similar thing will happen. Consumers, ever more reliant on their tech, will want quick answers to their questions and find the least expensive way to purchase their holiday? Will this make the online players stronger? Will consumers expect to be able to look at any travel website and search and make comparisons for holidays?

Travel is far more complicated than insurance to buy and sell. The broad nature of travel means that it is difficult to envisage a ‘gocompare’ for the whole of the travel industry ( although SkyScanner is achieving this for flights). Far more likely that consumers will have conversations with their existing travel provider and that provider/ travel agent, will value their loyalty and ensure that they do price match and go further to keep the customer. What the future does say though, is that anyone selling travel will need to have an online presence that allows consumers to search and find holidays from across their given speciality, whether they are based online or on the high street.

From an insurance angle – it’s not surprising that Compare the market as it’s tagline – easy for the consumer, but more importantly for them, simple model that Insurance companies have capitulated to.

On this page