Source: Radio New Zealand
Supplied / Kiwibank
A recent insurance promotion in which customers were offered Prezzy cards for new business is a reminder to watch out for loyalty tax, Consumer NZ says.
Glenn Marshall, who is an insurance broker but is acting in a personal capacity as a consumer, has complained to IAG about a recent promotion across several of its brands, in which people taking out new insurance cover were offered $200 Prezzy cards.
He said it seemed to create a situation where those who were shifting to a new insurer were able to access bonuses that loyal customers could not.
“My wife and I own our own home, have no mortgage and savings. However, many households and pensioners are already struggling with premium increases. Promotions that reward churn – and effectively penalise loyalty – shift costs on to renewing customers.”
IAG told him in response that it was not a discount on the premium but an incentive for new business and was available to new and existing customers who initiated new business.
Marshall has also complained to the Financial Markets Authority.
A spokesperson told RNZ the authority was aware of the promotional offers.
“These types of promotions do not in themselves create concerns for us. They can support healthy competition by encouraging customers to shop around and choose the provider that best meets their needs.
“If consumers have concerns about any offer or promotion, they are welcome to contact us.”
Consumer NZ insurance spokesperson Rebecca Styles said similar promotions had been used in the past to induce customers to switch providers.
“It does highlight that existing customers are likely missing out on those deals, in what’s called a loyalty tax. We find in our surveying that most people set and forget insurance. We would encourage people to shop around and take advantage of these deals, providing that when they switch, they’re getting a good deal on their premiums and the policy details make sense for their circumstances.”
IAG has been approached for comment.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
