Hi all,

One year ago I was with the post office insurance and got a good deal. At the end of the policy the renewal was expensive and I was not entitled to any discount as a current customer, therefore last year I used another company.

This year, time for renewal, moneysupermarket.com comparison came up with £122 including the £50 cash back. I tried to go ahead with the quote but the site says "Quote Sold".

So, I tried again but on the Post Office own site, this time coming up with £218 with £50 cash back, this making it £168 total, higher than moneysupermarket.com but still not so bad, but again I could not accept the quote.

Telephoning the Post Office, asked exactly the same details, but now the quote is £350 with £50 cash back, that is over double the original quote.

They explained to me that the original quote and the quote on their website is only for new customers. They keep my details on record and I will NEVER be able to have a quote as a new customer.

Now then, can they really do this, is there not some sort of law that prevents them from doing this. Regardless of the cash back, the fact that will keep me on file as a customer and not allow me a new quote has to be wrong.

Oh, I have not had any claims with them, (or anyone else for that matter), no legal problems or anything, it is just pure discrimination against a good returning customer.

What can I do?

Ely

You are not a new customer. You do not receive the preferential rate a new customer gets. Where's the unfairness? Are you suggesting no company should be allowed to offer incentives to attract new customers? Do you want companies to falsify their records? Why is their behaviour wrong?

But I AM a new customer or would be this year.
This is NOT a renewal with the Post Office
It is fine if they offer a preferentail rate for a new customer. As I have not been insured with them for a year, then I would be a new customer. There should be no grey area here.
Does this make me an EXISTING customer of all the 20 previous insurers over the last 20 years?

Hi --- It makes you a returning previous ex-customer, not a new customer.

In the same respect if you were to return to any of the 20 companies that have covered you in the past.

I agree there is no grey area. A returning customer is not a new customer. You are a previous customer who is returning.

If it is unfair to treat returning customers differently from new customers why is it not unfair to treat renewing customers differently? The idea that you should be able to alternate between companies and repeatedly receive a 'new customer' discount is ludicrous.

Gosh you guys are harsh when someone asks a pretty sensible question.Clearly Ely is a past customer of the post office by any definition. It also looks like the postoffice or any insurer can do whatever they want.

If I could take the liberty of rephrasing the question.Why wouldn't the post office want to attract Ely back to them with a competitive quote ? He/she had a good claims record,no payment problems and presents a good risk. What is the difference to a similar but brand new customer where some of this data may be incomplete but the overall risk profile will be the same?

I don't follow the logic either Ely.

Hi backfoot ......My comments don't appear to be harsh at all.... just realistic.

I didn't want the OP to be under the mistaken illusion that they could class theirself as a new customer, when clearly in the true sense... they are not.

I agree that insurance companies and other institutions, eg banks and lenders seem to be a law unto themselves and are prone to, "cherry pick" their customers, but until other outside regulations are in place it would seem that they are free to continue this practice whether we like or agree with it or not. All we can do in the meantime is vote with our feet and take the business to another company that welcomes it with open arms, or until they too decide that we no longer fit their criteria which meams shopping around for a new quote and moving on again.

Reality my old friend, not harshness, you know me... if anything I am on the side of the consumer.

Ck,

Loose phrasing mate.I didn't mean you. Sorry. I fully know your track record as well as the quality.

Turning back to the issue though. Yes we can choose our supplier but what i was genuinely curious about and I think at the heart of the original poster's question was the rationale behind their approach.

The underwriting risk,is exactly the same,the original quote proved it. Yet ,on the basis of picking up a brand new customer they offer a huge discount.The type of customer they will pick up is exactly the market savvy person who shops around and will probably leave them next year as did this one.They could recapture him/her but presumably they don't feel that their loss leader quote (?) will be worthwile a second time around.

It's just a bit naff really and makes a mockery of so called loyalty to a company .They obviously don't care.It's particularly poor when they are using their 'safe and reliable' brand to atract you in the first place.Probably just a front for another big insurer.

Have I got it right or am I still missing the point?

Your reasoning is perfectly sensible, I see a point coming when most of these companies that have picked and chosen their customers in the past will run out of options because disgruntled ex-customers will not return as a matter of principle anyway.

You will really see them then start to panic and change their attitude when they are struggling to attract the amount of business they require in order to be profitable.{Look what happened when British Gas slowly realised).

It's all roundabouts and swings at the moment.

I was going to leave this thread alone because I thought it would be over by now but here we go...

With insurance, there are things like gross written profits, less claims, less expenditure etc etc. to account for.

If the Post Office offered this rate to everyone, including previous customers, it would actually cost them money to write the business as opposed to making the profit required. Insurance companies make very little money per capita whilst writing the business, especially when going through comparison sites like MS, Confused, GoCo etc. due to the commission to be paid to the agent, the staff member, and advertising. Depending on the deal with the aggregator, an intermediary/direct insurer can pay an average of £49-£53 per policy sold through their site! These are acquisition deductions and profit is made by renewals and cross-sold products.

The Post Office are trying to obtain a significant (and probably a calculated-specific) number of new business customers before the promotion ends, which gives a very accurate projected profit figure for the next year. Whilst you are a returning customer (in view of the promotion) you may have left them originally for some other motive. Insurers have an increased chance of customer retention from 'brand new customers only' rather than returning customers.

It's not discrimination... it's business!

There's your answer.

Thanks for explaining their business model.

The trouble with it is that ,certainly for me,it doesn't work.I may take advantage of it for the introductory offer,ignore any crossselling attempts (costing them more) ,then switch to the next offerring from somebody desperate for volume business.I suspect like CK ,most people who switch using comparison sites,shop around for crossold products as well and instead of developing their brand,they actually join the pit of all those doing the same,so there is no differentiation.

What's hard to follow is the discount is huge. It just goes to illustrate how little actually depends on your insurance risk profile but more on marketing to different segments.

I agree its business,but its not to my taste. NR were in business as well and look where its got them.....lol

Of course it works! It's worked very well, especially in the past 10 years! You will be very suprised at the number of people that do not look around each year and where tacit renewals are enforced. There are a high number of people that do search around for quotes but where the price increases (either due to their own error in not understanding, or the aggregator's poor questioning and mapping) they stick with the same company due to the hassle.

As stated, insurers have a higher rate of retention from new customers after the first year which steadily declines thereafter; but creating a cycle by new offers being sold and bought.

A lot of direct insurers have fewer aquisition costs due to the lack of commissions paid to 3rd parties for a 'finders fee', thus creating higher frequency of lower premiums; which then creates more customers than they can handle and puts a strain on their claims ratio and targets. Swift are a prime example of the opposite. They advertise for themselves, and are on the panel of aggregators, and offer this £30 cash back nonsense (although there is a deal between MS and Swift on this). They do, however, have very few staff. Due to the low premium they provide, and after the aquisition costs, they have a very poor claims reputation and clauses within the contract to create a 'clawback' effect; to which will also give a negative persona (at claim stage).

I see your point RE: going elsewhere, but it's simply not enough to affect companies (yet!)

Thanks for your insight into the market. Makes interesting reading. I think my point remains that in the long run,this will all be counterproductive but then again there are still so many people who have not switched energy provider,so it may be longer than i think. In the meantime,I will have to get on and make savings where I can utilising search engines/best buys etc.

Flipping it to the credit card market, things have caught up there do some extent.Introductory offers,free balance transfers,high credit limits are coming home to roost with a vengeance for the customers and the providers.So again a business model which may work for a while but can be totally flawed if economic conditions alter.

But we're talking insurance?? The business model would be a hell of a lot different for gas, credit card companies etc.

LOL - round and round in circles with you. Another one that doesn't listen. Tittish.

Vicissitude:

But we're talking insurance?? The business model would be a hell of a lot different for gas, credit card companies etc.

LOL - round and round in circles with you. Another one that doesn't listen. Tittish.

hmmm.I actually said thanks for the insight.Not sure why you have gone off the deep end.I do listen( well read in this case).

Just because someone else develops a discussion and may dare to differ with at least some of your 'all knowing comments' doesn't make them tittish.It's an interesting style you adopt,all sort of superior and arrogant when you don't get a consensus to your view.I thought it was the same when you were challenged by MS about the Swift issue and your categorical allegations.You quickly shut up shop when they came back with a counter argument......lol.You got your assumptions totally wrong then and when you accused me of being an MS employee .

Heaven forbid that there is anyone approaching your expert status.