If your car insurance policy is due for renewal soon, it could be an opportunity to shop around.
"The first thing to do would be just assume that you can get a better deal," says Choice data analyst Mark Blades.
"If you spend the half an hour comparing on [premiums], you can be saving yourself hundreds of dollars each year, so why wouldn't you do it?"
First, find out if your cover automatically renews, so you don't miss the opportunity.
Why are you paying a loyalty tax?
While rises in premiums may reflect rises in the cost of repairs, profitability in the Australian car insurance market still rose by $1 billion last year.
The way insurers increase profitability, says Mr Blades, is by having more long-term clients on their books.
That means attracting new customers (who they hope will become long-term customers) is one of their primary objectives.
"Their business model is to get as many new customers as possible each year by offering them hefty discounts up-front, through different channels, phone and online," Mr Blades says.
"Then the expectation is that discount sort of disappears within the first year or two, and then you're paying these inflated premiums after a few years' worth — and that's where they get the value out [of you]."
He adds that this sort of pricing strategy "isn't unique to car insurance".
"It's also how home and contents insurance operates, energy retailers on the east coast, similarly — pretty much anywhere you have a product where the pricing is unique to an individual, because of where they live, the address or the location — insurance can get away with this sort of opaque pricing strategy and it's not ideal."
How can you get a better deal?
When you do get an annual renewal notice in your inbox or mailbox, chances are it will be an increase on what you have been paying for the previous 12 months.
Mr Blades says companies often expect loyal customers "to be lazy with their renewal notices, and not compare [premiums] each year".
"People will often think that because they've been a lifelong customer of the same company for all these different products … that they've been taken care of, but we know for a fact that's not the case.
"Go online and compare — and just assume you're getting ripped off."
He says insurers are unlikely to offer a discount on an existing customer's premium "unless they think they really need to", and that often means you need to ensure your call is transferred to an insurer's retention team.
"You can ask them, in plain English, 'is there anything I can do to get a further discount?' and they should be [suggesting] things such as you could restrict the authorised drivers, restrict whether you have people under 25 driving — some insurers will let you have a discount for that.
"You can also talk to them about increasing your excess level — that may be something to consider.
"There are various discounts that insurers can offer but they won't necessarily [offer] that information; it's not in their best interest to do so unless they're trying to keep your business."
Putting the advice to the test
When my car insurance premium renewal arrived in my inbox a few weeks ago, I did the maths and was shocked to realise it was a 19.72 per cent premium increase on what I'd been paying for the 12 months prior, despite not having ever made a claim.
I used an online comparison site and found at least four insurers offering a cheaper premium, so called my insurer to query what I considered to be an exorbitant price hike.
I was told that the increase was due to inflation, a rise in operating costs, and the increased cost of repairs.
When I pointed out that an online comparison site returned several cheaper offers and I was considering changing insurers, I was put on hold for a couple of minutes, and then offered a small "discount".
I politely pointed out this was still substantially higher than some of their competitors were offering me as a new customer, and more than five times the CPI rate, and asked if I was best to start calling some of the other providers.
After again being put on hold, a "discretionary discount" was offered, which brought my monthly premium payments down to 1.26 per cent less than my last year's premiums.
Admittedly it did take an hour of my time, but the result is I'm now paying almost $300 a year less for my car insurance than I would have been if I hadn't queried it.
