Aviva bows to consumer pressure and launches industry first subscription insurance product
Aviva, Britain’s biggest insurer, which employs 2,500 staff across hubs in Perth and Bishopbriggs, has submitted to mounting pressure to provide customers with a policy that does not penalise those who pay monthly.
Following the claims that Aviva had been punishing loyalty, the firm has this week unveiled a new policy – Aviva Plus – which charges a monthly fee for home and car insurance and can be cancelled at any time free of charge.
Aviva had been criticised for its strategy of luring in buyers with ultra-low premiums only to raise them 12 months later if a customer does not switch and locking them in to long-term contracts.
And until this week’s move, Aviva customers who wanted to pay in monthly instalments had been forced to pay extra.
Such practises have been widespread in the industry but Aviva has moved to leave them behind as pressure from the public and consumer groups has intensified.
The move will also now pose a question to Aviva’s competitors as they continue with such policies.
In what the firm says is an “industry-first subscription-style insurance product”, AvivaPlus “offers simple, flexible insurance cover, monthly payments with no APR, no charges to cancel or change and a renewal price guarantee for home and car insurance”.
Aviva said: “A key feature of the product is the renewal price guarantee, which is aimed at addressing price differences between new and existing customers.
The guarantee ensures existing customers are offered the same or an even better price than an equivalent new customer at their next renewal.”
Initially, customers will be able to buy AvivaPlus home or car insurance, with three tiers of cover so customers can choose the level and price that suits their needs.
Aviva said the products have been simplified, and it is easier for customers to check their level of cover and switch between the tiers. Customers who buy home and car insurance together can benefit from a single renewal date as well as a multi-product discount.
Aviva’s UK Insurance CEO, Andy Briggs, said: “We recognise that consumers want the insurance industry to listen to them so we’ve worked with thousands of customers to understand how insurance could better meet their needs and provide the flexibility they want for their modern lives.
“AvivaPlus is a reinvention of insurance, which has been developed and tested with customers’ needs at the centre, and it’s now starting to roll out alongside our existing products. Like subscription services, it’s designed to make it easy for customers to change their cover as often as they want without incurring charges.
“Importantly, AvivaPlus addresses price disparity, regarded by an overwhelming majority (82 per cent) of consumers as one of the most unfair practices of the insurance industry. With our renewal price guarantee, which ensures existing customers are offered the same or an even better price than an equivalent new customer, we’re creating a level playing field for new and existing customers.”