Beating the loyalty tax: NSW regulator requires insurers to display previous year's premium on all renewal notices
WHEN: 10am, 26 June 2019
Win for consumers as NSW Regulator requires insurers to display previous year’s premium on all renewal notices
From 1 July, insurers will be required by the NSW Emergency Services Levy Insurance Monitor, to include the price of the previous year’s policy along with the new premium price for all home insurance renewals in NSW.
Savvy consumers who shop around or question their insurer could save on their premiums and beat the so-called ‘loyalty tax’.
NSW Emergency Services Levy Insurance Monitor, Professor Allan Fels, said the information is now a requirement. It has not previously been easily available to consumers who often do not keep the previous year’s paperwork to make the comparison themselves.
“NSW is leading this important reform which will enable consumers to see at a glance what they paid last year, and how it compares with the renewal price being offered this year.”
“People should be able to see any price increases easily, particularly given the practice by some insurers of charging higher premiums for renewing customers than for new ones.”
Last year, Professor Fels published a study which revealed NSW insurance consumers who renew a home and contents insurance policy with their existing insurer pay on average 27 per cent more than new policyholders. This translates to hundreds of dollars for the average home and contents policy.
“This ‘loyalty tax’ occurs where discounts are offered to attract new customers, but premiums are then raised at future renewals. Many people would regard this as unfair. The ability to see last year’s premium at renewal will help make more people aware of such increases.
“Consumers will be more likely to notice any increases, question the price with their insurer, and switch provider if they are unhappy with the response.”
All home and motor insurance renewals must also show the components of the premium, including the Emergency Services Levy (ESL).
Professor Fels is carefully monitoring the price movement of all components of insurance premiums to ensure insurers do not take advantage of changes in ESL by charging excessive premiums.
“While some price movement of the ESL component of insurance premiums is to be expected, I’ll be carefully watching premium price movements in the event of any opportunistic price gouging.”
The directive requiring disclosure of last year’s premium is based on the Monitor’s legislative powers. All of the major insurers have indicated they will be in a position to fully comply by 1 July or shortly thereafter. Professor Fels said while the notice to disclose the previous year’s price is mandatory in NSW, he understands that some insurers will implement it nationally.
Media: John Kelly | 0407 071 703
Media conference details:
Level 18, 1 Margaret Street, Sydney
Professor Fels will announce regulatory actions being taken to curb loyalty taxes being paid by unsuspecting Australian consumers. He will also reveal the massive scale of these loyalty taxes across a host of products and financial services Australia-wide. At the press conference Professor Fels will reveal damning figures that expose the stunning scale of the loyalty tax problem at a national level across a wide range of financial services and products. Professor Fels will expose the practices used by a host of Australia’s biggest corporate names to gouge unwary customers.