Car and home insurance companies are forever looking for new ways to make money out of their customers – and the Insurance Blogger can reveal yet another.
After recent blogs highlighting the cost of repairs and offering tips on how to drive down the cost of car insurance, it comes as no surprise these slippery customers have other tricks up their sleeves.
Phone calls are the latest money-making exercise – free calls to tempt new customers while loyal customers who want to talk about their cover, make a claim or complain have to pay premium rates.
Free 0800 numbers are on most of the new business lines – while only six out of 34 banks, insurers and energy firms tested by consumer champion Which provided free phone options for current customers.
Instead, most advertise 0844 or 0845 numbers, including says Which, leading insurer Churchill.
The costs vary for a 20 minute call to premium numbers from a BT landline –
● 0845 – around 50p
● 0844 or 0870 – around £1
● 0871 – around £2
Calls from mobiles cost even more
The Insurance Blogger assumes that insurers budget for the costs of administration, including sending letter and telephone calls in the cost of a premium.
After all, if they are clever enough to calculate risk to set a premium, their mathematicians must be able to cost how much they spending managing customers and claims.
If call centres are raking in an average £1 a minute, if every line is picking up a call for 8 hours a day, that adds up to every phone in the centre earning the insurer £480 a day.
Now times that by five days times 52 weeks and that’s £124,800 a year.
That’s a conservative estimate as most customer lines are open for more than eight hours a day and across weekends as well.
To the Insurance Blogger’s mind, that’s money that insurers could be diverting towards cutting the cost of my cover rather than towards the pockets of shareholders as dividends.