Awards, ratings and discounts: How to navigate marketing tactics when buying insurance

Get 20 percent off if you apply online! Ten per cent discount for purchasing both home and contents insurance with us! Multiple-award winning home insurance! 

These offers certainly sound enticing, but do ratings and awards carry any weight? And how can you tell the difference between a genuine discount and clever marketing?  

You probably can’t, says Steve Mickenbecker, Canstar Group executive, financial services.

Tempting offers

“There are discounts available up to 30 per cent [for applying online] and that’s quite startling,” he says. “But if that’s 30 percent off a really expensive policy, the policy will probably still be expensive. So you’ve got to look at other quotes and then compare. The figure that matters is the amount you’re actually paying minus the discount.”

Susannah Binsted, awards lead for finder.com.au, agrees the only way to work out if a discount is genuine is to go through the application process to determine the annual premium.

“Discounts are used to lure customers over the line,” she says. “But our advice is to treat discounts as the cherry on top rather than being a deciding factor.” Binsted also urges customers to read the terms and conditions of any discount, checking for eligibility.

Multiple policy discounts

Insurers frequently advertise savings for buying both home and contents insurance or for taking out multiple insurance policies. They’re typically genuine discounts, but customers still need to weigh up the policy price and inclusions and compare with other providers.

“Companies give you greater discounts to attempt to get a loyal customer,” says Mickenbecker. “But you can’t rely on that because at the end of the day it might be cheaper for you to buy house insurance with one company and car insurance, for example, with a different insurer. 

Sometimes new customers are offered a better deal than renewing customers, so when your insurer sends you a reminder that your policy is due for renewal, use it as a reminder to get other quotes.”

Star performers – do awards matter?

When it comes to ratings and awards, Binsted says they can help consumers make an informed decision and can be a good way of narrowing down a large pool of insurance companies.

Last year Finder introduced its inaugural home insurance awards, rating brands (not individual policies) based on a customer satisfaction survey of 10,000 customers. 

“We used a number of metrics including value for money, customer service, features and benefits,” Binsted says. “And we ask whether they’d recommend the brand to a friend or family.” At Canstar, insurers are given star ratings based on both price and product features and those that out-perform receive awards.

“We look at 129 different products from 52 providers, and base our ratings on over 80,000 quotes,” says Mickenbecker. “It means we’ve done the hard legwork: an individual customer can’t possibly do that kind of comparison for themselves. We also disclose exactly how we do our ratings on our website, so customers can look at our methodology.”

Research and compare

But ultimately both Mickenbecker and Binsted say awards are no substitute for doing your own research.

“We know a lot of consumers are very time poor, and badges can act as a great visual cue for them,” Binsted says. “But with home insurance there are so many variables, the only way you can figure out the best deal for you is to go through the application process.”

Mickenbecker says crunch time with insurance comes when you’re making a claim, so the most important factor in choosing a policy is making sure you’re covered for the things you need.

“You can’t just look at price, you might end up with some cheap as chips policy that doesn’t have what you really need,” he says. “You’ve got to look at what’s covered – storm, fire, theft, flood, types of flood – plus the service factors and the availability of discounts in assessing whether the policy stacks up in terms of the value it’s giving you.”