Banks To Scrap Insurance Teaser Deals
A lot of us are guilty of just accepting our home insurance policy renewal when the letter arrives in the post. A lot of insurers like to increase their premiums in the second year which means that customers end up paying more than they should for their insurance.
In a change of heart, Royal Bank of Scotland (RBS) and NatWest have revealed their plans to change it up, getting rid of these first-year 'teaser rates' on their home insurance policies. Starting this coming Wednesday, these banks will give new customers their prices fixed for three years instead of just one.
These new three-year fixed price plans should be much fairer and more 'black and white' for customers. For example, customers will be able to plan their budget better in the long term and they won't have to fiddle around looking for a new policy every year at renewal time. According to the banks: "The cost of the policy will remain the same as long as no claims are made during the fixed period. But the risk with going for this type of deal is that you won't be able to benefit as quickly as others if home insurance prices fall (unless it coincides with your renewal)."
RBS and NatWest's head of mortgages and protection, Lloyd Cochrane, said: "We want to help customers out, not catch them out. The home insurance industry is dominated by companies offering introductory offers and teaser rates and we don't think that's fair. We want our customers to be offered our best price every year, not just in the first year. Removing another teaser rate and changing the way we offer insurance is another step towards earning back our customer's trust."
These changes are the latest implementations in the 'fairer banking' strategy which was introduced last year as a way to gain back customer trust after the banking scandals of our recent past.
James Savery, 07 September 2015