5 ms·

Well put. I think I saw this very dynamic in action with my car insurance this year. AAA tried to bump it 40% over the previous year with no claims in previous

Well put. I think I saw this very dynamic in action with my car insurance this year. AAA tried to bump it 40% over the previous year with no claims in previous 5 years and no changes in major underlying parameters. I think mileage may have gone up slightly but I'm still well below the norm. Well, I guess AAA finally hit that "gap between your changes and the long term change in churn" for me. I dropped them for GEICO. But even before I left, I called them back and gave them a chance to match the GEICO quote. Their phone agent seemed to have no path in her script to consider or escalate this offer. It sounds like we may need a catchy term for that gap you mentioned, the one where as a consumer I'm ready to jump but the alternatives (if any still exist) don't feel like they're worth the trouble. (I'm at that point with my cable internet provider.) Something like the "Recurry" or "Gamey Valley".

GFischer 9y ago
I worked in insurance that kind of increases do work (for the insurer), but we did it in the "boiling the frog slowly" way so there was no 40% trigger to wake you up. We had little churn, if you stayed a customer after a slight rise, 90% stayed for the next slow rise.
- Scoundreller 9y ago
  The big pharma approach vs. the Martin Shkreli approach.
confounded 9y ago
> It sounds like we may need a catchy term for that gap you mentioned, the one where as a consumer I'm ready to jump but the alternatives (if any still exist) don't feel like they're worth the trouble. Captive customers? Rubes?
rm_-rf_slash 9y ago
I call it a friction trap. Somethings gotta change and it’s certainly possible, but the friction is discouraging so you stay in the trap.
Vibrelli 9y ago
I call it "Loyalty Tax", Australia is terrible for it. Shop around every year as most of these brands are just identical white labeled policy underwritten by the same insurer. One trick I stumbled across last year was comparing prices on an aggregator (eg I used iSelect), and not buying. Then the agent called the next day and offer a 15% discount on my already cheaper price.
- angry_octet 9y ago
  Same with electricity retailers. And if your existing company sees you are churning they will call in the cool off period to (a) entice you to change with a slightly better offer, and (b) find out the competitor's price. (I always give them a lower price to match than what I've been offered, because price matching enables the incumbent vendor to rip everyone off with bad list prices and private deals). Be careful with iselect though, I think all their resellers use the same underwriter. I.E not real competitors.
- Scoundreller 9y ago
  Usenet subscriptions are like this too.
- themarlzy 9y ago
  I like “loyalty tax” as a term
aioprisan 9y ago
There are more cars on the road, cheaper gas prices means more miles driven per car, and we have fewer total accidents but the accidents we have are more expensive due to more expensive parts (i.e. bumpers these days are thousands of dollars due to sensors and cameras vs a few years ago). All combine to create ~10% rate increase year over year.
- mcny 9y ago
  I know this sounds like conspiracy theory and I can't tell you if this is a trend or not but I've heard about it from several people. To add to your point, the inspector has more incentive and justifiable reason to scrap the car altogether (salvage title). Then, the inspector can buy the salvage car for pennies on the dollar, fix it, and sell it with a salvage title.
gambiting 9y ago
I was with Admiral here in UK last year, then literally got a quote that was 100% higher for renewal, with no claims and no changes to the car or my coverage - Aviva gave me a lower price than the original one with Admiral was, and when I called them to ask if they will price match there was literally nothing they could do to match it. Insane.

GFischer 9y ago

I worked in insurance that kind of increases do work (for the insurer), but we did it in the "boiling the frog slowly" way so there was no 40% trigger to wake you up. We had little churn, if you stayed a customer after a slight rise, 90% stayed for the next slow rise.

Scoundreller 9y ago
The big pharma approach vs. the Martin Shkreli approach.

confounded 9y ago

> It sounds like we may need a catchy term for that gap you mentioned, the one where as a consumer I'm ready to jump but the alternatives (if any still exist) don't feel like they're worth the trouble. Captive customers? Rubes?

rm_-rf_slash 9y ago

I call it a friction trap. Somethings gotta change and it’s certainly possible, but the friction is discouraging so you stay in the trap.

Vibrelli 9y ago

I call it "Loyalty Tax", Australia is terrible for it. Shop around every year as most of these brands are just identical white labeled policy underwritten by the same insurer. One trick I stumbled across last year was comparing prices on an aggregator (eg I used iSelect), and not buying. Then the agent called the next day and offer a 15% discount on my already cheaper price.

angry_octet 9y ago
Same with electricity retailers. And if your existing company sees you are churning they will call in the cool off period to (a) entice you to change with a slightly better offer, and (b) find out the competitor's price. (I always give them a lower price to match than what I've been offered, because price matching enables the incumbent vendor to rip everyone off with bad list prices and private deals). Be careful with iselect though, I think all their resellers use the same underwriter. I.E not real competitors.
Scoundreller 9y ago
Usenet subscriptions are like this too.
themarlzy 9y ago
I like “loyalty tax” as a term

aioprisan 9y ago

There are more cars on the road, cheaper gas prices means more miles driven per car, and we have fewer total accidents but the accidents we have are more expensive due to more expensive parts (i.e. bumpers these days are thousands of dollars due to sensors and cameras vs a few years ago). All combine to create ~10% rate increase year over year.

mcny 9y ago
I know this sounds like conspiracy theory and I can't tell you if this is a trend or not but I've heard about it from several people. To add to your point, the inspector has more incentive and justifiable reason to scrap the car altogether (salvage title). Then, the inspector can buy the salvage car for pennies on the dollar, fix it, and sell it with a salvage title.

gambiting 9y ago

I was with Admiral here in UK last year, then literally got a quote that was 100% higher for renewal, with no claims and no changes to the car or my coverage - Aviva gave me a lower price than the original one with Admiral was, and when I called them to ask if they will price match there was literally nothing they could do to match it. Insane.