New data from Roy Morgan shows as Australians have faced increasing cost of living pressures over the last two years fewer are automatically renewing their household insurance policies (a market of nearly 29 million policies) while an increasing number are approaching other companies and considering switching compared to two years ago.
In the year to June 2023 only 66.1 per cent of the 29 million household insurance policies were renewed without even approaching another company, down from 66.5 per cent in the year to June 2022 and down from 67.2 per cent in the year to June 2021 – a decline of 1.1 per cent points over the last two years.
Over a fifth of household insurance policies, 23.2 per cent, were renewed after approaching other companies, up 1.1 per cent points from a year ago. There is also an increasing market for new entrants to the market with 4.3 per cent of household insurance policies taken out for the first time, up 0.4 per cent points from two years ago.
These are some of the latest findings from Roy Morgan’s Single Source insurance data derived from in-depth personal interviews conducted with over 60,000 Australians per annum.
CGU, APIA and RACV have above average automatic renewal of household insurance policies
Analysing the company specific data on household insurance closely shows that some companies are performing far better than others at securing automatic renewal of policies.
The four brands which have the highest proportion of automatic renewals for household insurance policies include RAC, RACV, CGU and APIA. These four brands have automatic renewal rates of over 70 per cent of their policy holders – over 5% points above the market average of 66.1 per cent.
In contrast, there are several brands with lower proportions of automatic renewals of under 60 per cent of their household insurance policy holders including Woolworths, Budget Direct, Youi and AAMI.
Michele Levine, CEO, Roy Morgan, says that as cost of living pressures have increased over the last two years fewer policy holders are automatically renewing their household insurance.
Levine said: “The latest Roy Morgan data on household insurance policies shows that in the year to June 2023 over 8.2 million household insurance policies were at risk of being switched to another provider, up from around 7.2 million two years ago. In the pre-pandemic period in the year to March 2020 just under 3.7 million household insurance policies were at risk of being switched.
“Of the 8.2 million at risk policies in the household insurance market, the vast majority, around 6.4 million, were eventually renewed with the same company. However, this does leave over 1.8 million household insurance policies that were eventually switched.
“As these figures show the number of policies at risk of being switched jumped significantly during the pandemic and has continued to rise since as Australians grapple with a rising cost of living caused by high inflation and increasing interest rates. Official interest rates have increase up 4% points since May 2022 to 4.1 per cent – their highest level in over a decade.
“The big increase in Australians considering switching their household insurance providers during the pandemic has not returned to pre-pandemic levels but has continued to rise as the economic uncertainty has increased and the competitive forces in the industry have intensified.
“The results from the latest Roy Morgan data shows 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 their most valuable goods.
“The financial stresses facing millions of Australians present an opportunity for nimble and innovative 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.
“The latest Roy Morgan data shows 1.57 million Australian mortgage holders are now ‘At Risk’ of mortgage stress and almost 1 million are ‘Extremely At Risk’ – both figures at or near record highs. Learn more about the financial stresses facing mortgage holders here.
“The data highlighted here spotlights only a small portion of what is available from Roy Morgan on all types of household insurance and can be trended over many years. The information is derived from in-depth personal interviews conducted with over 1,000 Australians per week and over 60,000 per year.”
