Why is comparing car insurance so difficult? We turned to Simon Lindsay from online car insurer Progressive to shed some light on the industry, and what you can do to save money on your car insurance.
If you turn on your TV these days, chances are you’ll get inundated by the current surge in car insurance advertising. There are national icons emerging like AAMI’s Rhonda, the Budget Direct couple, the slick chap from Youi and our own quirky Kitty from Progressive. Add to the mix a range of new car insurance distribution brands – Coles, Woolworth’s, Auspost, Virgin, Crazy Johns and even Dodo, and it’s a pretty chaotic scene. All from what’s generally regarded as a “low interest category” where the product is generally bought, not sold.
What’s behind it all?
The short answer: Australian car insurance has been very profitable over the last 10 years, and a number of new international and local challengers believe they can offer more competitive rates than the incumbent brands. Challenger brands are advertising to win your business and introducing more innovation to the market to reduce premiums.
You may feel car insurance has already been competitive, with many active brands available to you, but, in fact, two groups control 12 car insurance brands and around 70% of the Australia car insurance market. There’s the Suncorp Group with AAMI, APIA, Bingle, GIO, Just Car Insurance, Suncorp Insurance and Shannon’s; and Insurance Australia Group with CGU, NRMA, RACV, SGIC and SGIO (IAG also had the Buzz Insurance until recently shut down). Australia has the Big 4 in banking, and really the Big 2 in car insurance.
What does all this mean for you?
Well, it means that you can save money. It’s a great time to shop around for car insurance, and you should do so each year or two, just like you should shop around for a lower home loan rate, cheaper power, cheaper phone and Internet, etc. If you’ve been with a big brand car insurer for a few years, don’t be surprised if you could save a lot of money with a challenger brand. For example, Progressive has been able to save many of our customers hundreds of dollars each year with our lower cost multi-car policies.
Why shop around?
Well car insurance pricing is actually quite complicated, with many variables determining your annual premium. So you should expect variation in the quotes you’d get from just a handful of brands. Your age, suburb and type of car may be considered a much higher risk by one insurer over another, so they’ll quote you a much higher annual premium. Then, each insurer has different target risk profiles which can create further swings in what they’ll quote for your annual premium. Youi, for example, leads with heavy discounts based on how you use your car, Real Insurance allows for a low mileage discount (PAYD), Progressive is 100% online with extra discounts like our claims free, multi-car and homeowner discounts, and Budget Direct allows you to exclude youth drivers to save more. One of them will likely present a big saving for you, so going online to get a few quotes could pay off in big year on year savings.
Get a price that saves, but make sure the policy has the basic cover that’s important to you, and visit car insurance review sites like Mozo to gauge how the insurer treats existing customers. Read the Product Disclosure Statement so you understand what’s covered / what’s not and other specifics of the policy. CompCompare from Progressive is another tool you can use to compare comprehensive car insurance amongst major brands.