Author: theacourtaccount

Should we really need 20/20 vision to spot an insurance hike?

Should we really need 20/20 vision to spot an insurance hike?

When insurances come up for renewal it should now be easy to see if the price is still right or whether some inflation busting rise threatens to severely hit our budget.   But just how clear are any annual price changes being spelt out to us? Not always as well as they could be, judging from a sample piece of research that I’ve just carried out.

The background here is that since 1 April 2017 all insurance companies have been ordered to show both the price we will pay to renew a policy and, new and very importantly, the price we’ve been paying up to that point.  That means last year’s policy price is also there on the letter allowing you to make an instant direct comparison.  It’s widely known that the insurers have often exploited the opportunity to increase annual premiums once we’re customers because they realise that not many of us will take the time to fish out last year’s policy from the drawer and compare it.  For the few who have done, there’s usually been quite a shock.

So, as the months have passed since the regulator’s rule change demanding this like-for-like comparison, I’ve been asking friends and family to share their documents and putting the new consumer information to the test. From even a small cross-section of renewal documents it’s possible to conclude that there are now both the good and some ‘could do much better’ insurers out there. The ones I’ve considered are shown below. In all cases there were no claims and no requested changes to the policies, but all went up in price.

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It may come as a surprise that in my view, on these findings, it wasn’t a bank’s insurance rise notification style that came out poorest but an insurance product linked to one of our largest insurers, Aviva. This was followed by a car insurance renewal letter from LV, a leading mutual.  Although each of the renewal documents stated the price change somewhere in line with the rules it was the prominence given to this that greatly divided them.

It’s likely that the financial regulator expected the price comparison information to be shown both big and bold and so praise here, for presenting it in just that way, to Lloyds Bank Home Insurance.  It was the stand out letter design in this research. If you tell everyone about the changes showing the figures in the largest letters on the page and illustrate them in a prominent and eye-catching information box then how could anyone miss it?

In fact it’s exactly what you need if, as in this particular case, Lloyds is asking you to shell out 24% more for home insurance than last year. The price difference is clear and encouragement for people to act and shop around to see if there’s a better deal, the main idea behind bringing in the rule change.  But it’s the approach of others that’s potentially more problematic as seen through this admittedly small scale review of their renewal letters.

First let’s take HomeServe/Thames Water. They offer a plumbing and drainage cover policy that is underwritten by Aviva.  The insurance is popular, particularly with older homeowners who may find it hard to do their own repairs or may have difficulties finding a plumber or drains expert.  In their renewal quote not only had the policy increased by a whopping 54% since a year ago but the old price was tucked away in a display right in the bottom corner of the letter that may well be missed on a first look. Calling HomeServe about this policy nearly always results in a price reduction but you have to wonder just how many people may not have called simply because their renewal letter lacks that large letter, side-by-side, clear comparison enabling view.

Then there’s the car insurance renewal letter from LV. This one contained news of a near 20% increase in premium and was just marginally better than HomeServe in the way it showed this.  The problem? Well although last year’s figure was at least quoted in the main text of the customer’s letter there wasn’t any attempt to show it in the same bold print that would’ve matched that of the renewal figure that was seen displayed in an entirely different spot on the page.

Take a look again at the letter images above and see what you think works best.

Let’s remember that consumers were at the heart of the reason for this rule change but can we really feel they’re getting the information presented in the way they expected? Isn’t there a case now for a standard way for all insurers to display their year on year price changes? Are these examples similar, better or worse than what you’ve experienced? I’d be interested to hear what you think and to see your examples.

My view, based on this evidence, is that if insurers can still regularly hike our insurances then some should be thinking much deeper on how to up their game on the way we’re being informed.

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Changing times for the pound – how are the bigger building societies handling the switch?

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Who’d have thought that a simple change in coinage would still prove quite so complex?

It was announced back in 2014 that the round British Pound coin would be updated into a more modern, less counterfeitable, 12-sided design (as seen here). Yet now that the date on which the old round and massively forged coins cease to be legal tender is here there’s still some confusion. What can we do with any remaining small hoard of coins or even a few of the odd ones we’ll undoubtable discover down the back of a sofa soon.

If you’re a saver that uses one of Britain’s building societies to keep your money safe then unless you’re very quick you may have left it too late for them to accept your old pounds.  While the very biggest societies will help, it’s an overall mixed picture on exactly which ones will still allow their members to pay old coins into their accounts after 15th October 2017, when the old coins are officially out of circulation.  My research shows that the top seven societies are split on whether to stop taking the old pound coins immediately or continuing to allow them to be paid in by their customers for an as yet unspecified longer time.  If you’re a customer with any of the smaller societies you should contact them direct for more information on what they’ve decided.

Here’s how the pound changing policies of the biggest societies line up..

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While it may seem surprising that some of the societies are being very firm in saying they’ll not accept old pounds from the moment they cease to be legal tender that doesn’t mean their customers don’t still have options.  Old pounds will continue to be accepted at all the high street banks and at the Post Office for a while yet, though inevitably there’ll come a time when this will cease too. Tesco have said they will continue taking old coins in payments at the tills for a week while Poundland, Greggs and some smaller shops will also continue taking them for a bit longer.

But, if spending your last round pounds isn’t important, I’d recommend thinking about saying goodbye to them by gifting to charity and there are at least two very good options to consider. The BBC’s 2017 Children in Need Appeal will gratefully accept your old pound coins as will this year’s Royal British Legion Poppy Appeal.  In fact, your building society is quite likely to have a special collecting box for one, or both, of these charity appeals when you next visit your branch.

Voter Turnout at Larger Building Societies in 2017

With the AGM season for the largest building societies now complete it’s possible to assess voter turnout results for the top seven societies this year.

My research shows that average voter turnout in 2017 is 10.6%.

Most societies, but not all, have recorded a small decline on their voter turnout compared to 2016 results.

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For more details please click on the link below to view my pdf, or contact me.

AGM Results Chart 2017 pdf

Why aren’t building societies getting a bigger vote of confidence?

Why aren’t building societies getting a bigger vote of confidence?

It’s that time of the year again when members, aka ‘the customers’, of our building societies get their chance to vote.  Many already have and the signs of support, or lack of it, will not make happy reading for society CEOs and executive boards. There’s again evidence of a continuing decline in the number of members who’re choosing to take the time to examine their society’s performance and then vote.  According to figures published or supplied by five of the largest building societies* the average voter turnout in 2017 has fallen to 11.73%.  In two of the societies turnout was close to just 10%.

That’s disappointing low given that all these societies remain strong, continue to provide the financial services which their members chose them for in the first place and would appear to deserve a better show of their members’ support. Imagine the outcry if that sort of low voter turnout were to occur in a general election or even a local council election. Questions would be asked about whether such low voting levels gave a strong enough mandate to those elected, yet very little is being said about this declining engagement to vote in the building society sector.

The Building Societies Association, which has records of each year’s voting and can make them available to all CEOs, could flag this up clearly and discuss it more openly in public.  A low-key report on engagement produced every three or four years just isn’t enough to either encourage or shame society boards to discuss the issue more seriously.  As a start, how about the BSA publishing the voter turnout figures for this year and last year and then continuing to do so each year in order to display the emerging pattern? Some societies, like Coventry and Skipton, already follow good practice and publish their annual voter turnout figures via their online results pages, but most societies still don’t do this.

We know that simple apathy has always played its part at voting time, and still does, but there appears to be a clear and growing need within societies themselves to place more effort into looking into the many causes and possible solutions to lower voting. An excellently designed and well written AGM pack is essential to get a society’s message across but if that’s still not converting members to vote then what’s to be done? I’d argue there’s still plenty to examine.

For example, bigger societies can look at the complexity on the AGM voting papers and their corporate governance code preferences.  Do members really want societies to ask them to vote to re-elect every single director every single year?  It may be recommended best practice under the code but it also makes for one very large and off putting voting paper, most likely to be ignored in most homes. Putting directors through the election process only every three years would help make that voting paper much slimmer, more approachable and probably result in more members voting each year.

Next let’s tackle that most played out case made by the loudest members at AGMs.  Their prime suggestion on how to get more people to take part in the ballot surrounds the nomination of member candidates. Their argument runs, ‘If a member stands for election to a board and is on the voting paper then more people will be inclined to vote’.  Most likely this is true and in theory it could happen, but it simply won’t as modern barriers are just too high.  A member will either fail to get the number of nominations needed to stand or find that the society board or the regulator blocks their nomination for lack of appropriate experience.  So let’s put this aside and discuss more realistic ways to boost voting instead.

We know well that there’s a clear relationship between saving rates and votes. As levels of interest paid on savings have gone down and down so have the voting returns. One approach for a society seeking the near certainty of a higher than average vote is to keep key savings rates high, Coventry already does this effectively and has consistently reaped a better level of voting than most other bigger societies. Not all societies can pursue this approach as they have different business shapes, sizes and product sets to consider but there are some things that all societies can do. For example, commit to careful and regular communication from the top outside of AGM time, have a strong brand message, community involvement and great customer service.  All these elements can help drip feed a feeling of popular approval and will help get those votes secured when it comes to the moment of asking.

While the movement still rightly looks back and reminds us of its democratic roots in the nineteenth century it also needs to look at the methods it uses to get its votes in today.  With research showing that younger members are the least likely to vote, innovation and creativity are needed if they’re to do so. Many societies now run impressive social media and encouraging younger members to vote, not just engage, via these channels is becoming increasingly important alongside a programme to educate younger members about the relevance of voting. And while all the research shows that older members vote in higher numbers let’s not force them to vote online at the risk of them not doing so at all and bringing the vote down even further.

It shouldn’t be inevitable that voting levels at bigger societies fall further but year on year that is mostly what’s happening.  Actions can be taken by societies to address the issue now, look ahead to their next AGM, and strategise on how to bring about change. No one wishes for it to need another global financial or banking crisis to provide the push for a greater show of society support, societies themselves should use every means they have to get the votes up.  There’s a duty to do so, a building society member’s vote is a unique right, too important to become just a meaningless mark in a declining example of democracy.

Let’s stop the voting slide now.

*Yorkshire, Coventry, Skipton, Leeds and Principality

(The writer is a former Head of Member Engagement for Nationwide Building Society)

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