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FCA stops insurance companies’ loyalty penalty

Today, (28/05/21) the FCA  implements a package of remedies to improve competition and protect home and motor insurance customers from loyalty penalties.  This follows the announcement on  22 September 2020 when the FCA said that it would reform home and motor insurance. It is focussing particularly on the current “loyalty penalty” that punishes existing loyal clients’ premiums and favours new clients.

In 2018 it found that some 6 million policyholders were paying high or very high margins over and above an average premium. Had they have paid the average for their risk, they would have saved £1.2 billion! It published a 31-page report on the insurance market and finally (two years later!) announced a consultation in September which closed 21 January 2021.

Many insurance companies auto renew policies at a much higher price. New customers benefit from a much lower price. A term known as “price-walking”. The only way to get a better price currently is to shop around and switch. The companies even use what could be considered underhand processes and tactics to target customers who they think are the least likely to switch with the best deal.

bmw car hire

The FCA estimates that consumers will save 4.2 billion over 10 years. The measures are due to come into force on different dates. The pricing, auto-renewal and data reporting remedies come into effect on 1 January 2022 and the rules on systems and controls, product governance and premium finance from the end of September 2021.

New rules for insurance companies

The new rules will mean that insurance companies must

  • Provide easier methods of cancelling the automatic renewal of their policy.
  • Offer the same price at renewal as they would to a new customer
  • Report data to the FCA for it to monitor and supervise the sector more effectively
  • Consider how they offer fair value to their customers

The FCA needs to ensure that it monitors adherence to these rules and takes action against companies which don’t. It still does not mean that you will get the best price on renewal as there could and probably will be better offers out there. See How to save money on your car insurance

FCA announces remedies to stop the loyalty penalty

How to save money on insurance and beat the auto renewals

How to save money on insurance and beat the tactics used to make you renew

 

Help with complaints

Cover of How to Complain updated 2019 large cow logoTo ensure that you know your rights and how to use them take a look at How to Complain: The Essential Consumer Guide to Getting Refunds, Redress and Results, as one reviewer says you’ll get more than your money back the first time you use it!

 

 

101 Habits if an Effective complainer book cover with logo

 

101 Habits of an Effective complainer designed to improve the way you look at and make complaints. Each page gives you a complaining habit to consider and an example of how and why it empowers you to become more effective in getting the results you want.

 

The Complaining Cow – free support for businesses

It takes 5 times as much to gain a new customer to retain one. So work on turning your customers into superfans who do much of the heavy lifting for you!

Join the Facebook Group Increase Sales through Customer Service: Compassion, Care and  Integrity  A private group where you can give and get support, advice and share good practice on how to improve customer service.

Free download Customer Service 5 ways to get rave reviews & referrals a few tweaks to your customer service can help you reduce the risk to your company’s reputation, finances and impact on customers and increase sales.

The Complaining Cow Services

To see how The Complaining Cow can help you improve your customer service see Services.

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Business Good customer service

Dear customer “Would you like some alphabet soup?”

The trouble with jargon when writing to customers

Jargon. Most of us hate it and yet we see it everywhere. Whilst it can help when talking to colleagues to expedite conversations, it is not a great idea when talking to customers!

Whilst there be some things that have to be used in correspondence with customers such as with legal requirements there is rarely a need for much of what we see. Vulnerable customers in particular can struggle with jargon and acronyms. People can’t work out what abbreviations are and will often forget, even if they’re explained earlier in the correspondence.

Jargon can be really boring too and we lose attention when we are bored! In effect, you are turning your customer off from reading the correspondence, increasing the gap between you and them, the opposite of what you want to be achieving.

hand writing in notepad in front of laptop

No need to be clever

Sometimes correspondence can just come across as the author trying to be clever or over-complicating things, when in fact the result is far from smart. You might know exactly what is wrong with the laptop that needs a repair but it is highly likely that your customer just wants to be sure that you are going to repair it and by when it will be fixed!

You want your customers to be interested in what you have to say! So, please engage appropriately with them. Trying to complicate and/or confuse the issue helps no-one.

Be genuine when writing to customers

When you write the letter or email, read through and ask yourself what you would think if you were elderly, or had a learning disability or anxiety or any other vulnerability. You may look at your correspondence differently.

More can be found in Think before pressing “send” in reply to a customer complaint.

Unless you are a lawyer talking about legal technicalities, there is no reason to be using words that could be considered legalese or old-fashioned such as “Hitherto”. It’s just not necessary. “Previously” or “before now” are both much more appropriate.

Keep it simple

Check for simple language. Use simple, clear, concise and readable wording that your recipient can engage with. If you can’t explain something in an easy way, do you really understand it yourself?

Whilst you are trying to improve your correspondence so that your customers understand and accept your reply and you increase loyalty and sales, have someone else look over your emails/letters for a short time. A fresh pair of eyes will give you a different perspective. It would be even better if the person checking for you is not part of your own business.

More tips for tweaking your correspondence to retain customers and get them referring people to you in the free download Customer Service: 5 ways to get rave reviews & referrals.

Remember, you are trying to inform, not impress, your customers when writing to them about a complaint they have!

Please, just make it easy for your customers.

The Complaining Cow – free support for businesses

It takes 5 times as much to gain a new customer to retain one. So work on turning your customers into superfans who do much of the heavy lifting for you!

Join the Facebook Group Increase Sales through Customer Service: Compassion, Care and  Integrity  A private group where you can give and get support, advice and share good practice on how to improve customer service.

Free download Customer Service 5 ways to get rave reviews & referrals a few tweaks to your customer service can help you reduce the risk to your company’s reputation, finances and impact on customers and increase sales.

Customer Service how to turn customers into superfans raving about your products/services