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Budget insurance has a unique set of reputation issues. It’s because of the structure of the marketplace which creates certain practices that make budget insurance brokers look like the ‘Ryanair’ of insurance.

Most budget insurance is sold through comparison sites and for anyone who has been on these sites, the prominent providers are the ones who offer the lowest price for the best cover. So brokers like Igo4 have created insurance products especially for this situation.

So when a motorist has to have insurance because it’s a legal requirement, they will often just go for the cheapest product that keeps them from being pulled up by the police.

The catch with this huge emphasis on cost, is something has to ‘give’. In the case of budget insurers  it is usually service and coverage levels.

Reputation

When there is a combination of legal requirement i.e. you have to do this, many unknowns and complexity with the insurance itself, you have a toxic mix that usually spills over to the internet in the form of frustrated consumers doing what they think is a service to others by giving companies like Igo4 terrible reviews online.

  • The perception: Igo4 is terrible on customer service and steals your money.
  • The reality: Customers ‘forget’ to give Igo4 information like correct home addresses, number of penalties on their licences and other things that affect premiums and so they buy a policy for £X but when the validation process happens it turns out the insurance premium should be £Y.

They have a choice, cancel the policy and pay a cancellation fee or pay the difference if the new policy is higher (If it’s lower, customers get a refund).

Legally Igo4 will have 28 days from when the policy has started to sort everything out. Consumers sometimes ignore the broker trying to contact them , hoping the problem will go away.

But because the broker HAS to resolve the issue, they will finally resort to withdrawing the funds from a customers account. It’s justifiable because a driver has to be insured when on the road.

With this backdrop budget insurers have a blighted reputation online.

To tackle these structural issues, Igo4 has approached the problem in four ways:

1. Consumer education

Legal regulations mean that insurance companies face being liable for drivers who are uninsured.  

This has led to stricter validation processes and meant that some drivers have been denied insurance, or have had premium surcharges levied on their accounts.  

iGO4 has set about educating its customers and potential customers online about these regulations so that there are fewer unpleasant surprises for everyone.

2. Say it like it is

In the past, many insurance customers have told ‘white’ lies in order to get lower premiums, changing their employment status or post code for example. Technology is wiping out this kind of approach.

When it asks for a car driver’s licence, the company insists on seeing the full document, which cuts out a lot of inaccuracies. This in turn yields lower premiums.

In marketing, we often try to gloss over the unpleasant parts of the pitch get the conversion, but Igo4 has found it’s far better to be direct with consumers and constantly remind them about how extensive the ‘know your customer’ process is.

It may not be a good sell, but this avoids many problems later.

3. Receiving complaints is a positive

The fact that customers are irritated because they have been denied coverage proves that the system is working, justifying the lower insurance premiums they offer.  

4. Create some perspective

With complaint levels around 4%, or in other words 4.5/5 stars for getting the job done well, there is a push within the business to explain to consumers that in a vast, vast majority of cases everything runs smoothly.

 

Final thoughts

As with all structural issues like this, where the framework for selling insurance products steers brokers towards paper thin margins and where customers are often legally obliged to buy insurance, it creates a plethora of issues that are challenging to say the least.

Stephen Croome

Published 17 January, 2014 by Stephen Croome

Stephen Croome is Founder of First Conversion and a contributor to Econsultancy. 

4 more posts from this author

Comments (1)

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fred wilde, operations manager at national trust

not the case. I took out insurance with these clowns. Not because I'm an 18 year old lunatic looking for a cheap option but because I had to ensure the family au pair and it was the only AFFORDABLE option.

They came out to fit the box. I lacked a piece of paperwork. i offered to scan and send or post the original but that wasn't what they needed. fair enough, I should have had the right documents. The installation engineer said it wasn't a problem, we could reschedule. I asked him if I needed to contact Wise driving/IGO4..'no, we'll contact you, it's no problem'. Of course it wasn't a problem. because they don't bother.

I then get 3 letters through my door on the same day. The first saying 'sign your agreement', the second saying 'your insurance will be cancelled in 3 days and the 3rd saying that it had in fact been cancelled.

Of course at this point you ring. An 0844 number it has to be said. You're then connected. But not to humanity, rather to a disembodied voice saying that all of their lines are busy and you will be connected to an operator. And you wait. And all the time you're waiting, you're being charged a high call rate. I gave up after 10 minutes the first couple of times, being at work and not having the time but when I got home I persevered.

it took 35 minutes for someone to answer. 35 minutes of being charged (over a fiver in total).

I explained what had happened and the 18 year old on the other end of the line (he must have been 18, or possibly from the outer nebula, because he literally had no clue about the company, its products of anyway to follow up on a complaint), told me that the policy was being cancelled because the isnurance company -IGO4 would not extend cover beyond the 25th (it was the 21st when |i called) and they could not fit the box until the 26th. Therefore I would be charged a £45 missed appointment call for the engineers visit (i can cope with that), a £75 cancellation charge of the policy, oh and thanks for the £181 we've already had out of you.

So, money up front...no comms if things don't go to plan and then a spate of rip off charges to cancel. In a way, I'm glad I only got marginally ripped off, relatively speaking, because some of the reviews i've read for some poor bastards who stuck a year out are appalling.

None of this makes sense until you find out that the broker and the insurance company are the same people. This is a set up designed to specifically target young drivers who are easily confused, unaware of their rights and basically there to be robbed. How these people are still allowed to operate is beyond me because it's little more than a scam. And not a particularly elaborate one at that.

i have left it with the ombudsman.

11 months ago

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