Consumer group One Big Switch has secured hardworking Aussies a 40% discount on home and contents policies – and that can only be a positive insurance story, can’t it?
Not at all, say industry figures, who fear the campaign’s intense focus on price is dangerous and ill-advised. About 70,000 people signed up to the One Big Switch initiative, giving CEO David Issa – a former CEO personal insurance at IAG – the bargaining power to negotiate a bulk deal with Coles Insurance.
News Corp supported the promotion and both the newspaper publisher and One Big Switch – which has previously run similar campaigns on mortgages and electricity – receive a commission for every person who takes out a policy.
Mr Issa says spiralling home and contents premiums “hurt everyone” and force some consumers out of the market.
But National Insurance Brokers Association (NIBA) CEO Dallas Booth is leading the charge against the campaign.
“One Big Switch is a real worry for us. It gives the impression that you can easily reduce the price of insurance by 20%, 30% or 40%. The reality is the only way you can do that is by reducing the cover.”
The campaign is not a threat to brokers, he says, because it focuses on the direct market, but NIBA believes:
“people should be thinking carefully about their cover rather than chasing a cheap premium.
The outcome won’t be realised until they need to make a claim,” he says.
The headline figure of 40% is not as straightforward as it first appears. The discount contains “an exclusive 13% discount for One Big Switch members on top of other existing discounts”, the group’s website explains.
ICA supports competition in the insurance market a spokesman said.
“However, offers to consumers must be fully compliant with the law in terms of consumer disclosure and advice.
It is important that consumers fully understand the risks of switching from their existing insurance policies.
ICA has a number of initiatives underway or completed that directly relate to the issue of insurance affordability, and works closely with governments and customers to help them understand insurance risks and develop practical solutions.”
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