Latest / Best of Business / Bodo Lang: Massey University marketing professor on Tower Insurance getting rid of multi-policy discounts

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Bodo Lang: Massey University marketing professor on Tower Insurance getting rid of multi-policy discounts · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: Tower Insurance is getting rid of the old multi policy discounts.
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  Speaker 2: This is the discount that you get on your premiums
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  Speaker 2: if you have some combo of your house and your
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  Speaker 2: car and your contents, or other different kinds of insurance
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  Speaker 2: all with the same company. Tower and other insurers have
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  Speaker 2: been fined in the past for failing to apply the
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  Speaker 2: discount correctly, and Tower's CEO says there's now an unacceptable
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  Speaker 2: risk it might happen again if they keep it, so
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  Speaker 2: they're getting rid of it. Bodo Lang is a marketing
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  Speaker 2: professor at Massi University.
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  Speaker 3: Evening, Bodo, Good, Evening.
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  Speaker 2: I struggle to believe that the risk is so high.
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  Speaker 2: What do you think, Well.
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  Speaker 3: It does seem surprising that this error occurs in the
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  Speaker 3: first place, But if you look at the customer numbers,
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  Speaker 3: you know they've got hundreds of thousands, sometimes millions of
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  Speaker 3: customers and you only need a small number. You know,
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  Speaker 3: in the numbers I've seen, it's literally zero point zero
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  Speaker 3: one percent, and that's enough customers for the Commerce Commission
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  Speaker 3: to swing interaction and that obviously is a huge risk
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  Speaker 3: for these large insurers.
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  Speaker 2: But how would it even happen. I mean, would it
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  Speaker 2: be a case that Bodo has taken out all this insurance,
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  Speaker 2: but they haven't linked all of Bodo's different insurances together
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  Speaker 2: in order to realize that he deserves a discount. Is
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  Speaker 2: that how it happens.
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  Speaker 3: I think that's what it is. And I think what
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  Speaker 3: these large insurers really struggle with is that they have
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  Speaker 3: often legacy systems that don't talk to each other. So
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  Speaker 3: they might have different divisions. They might have bought a
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  Speaker 3: life insurance division is on a different system, and so
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  Speaker 3: these systems often don't talk very well to each other.
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  Speaker 3: And it's not just a system but also a process issue.
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  Speaker 3: If you and me opened an insurance company, we would
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  Speaker 3: probably start from the ground up with some integrated, clever system.
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  Speaker 3: But that's not how these companies started off with. So
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  Speaker 3: they've got old systems that don't really speak to each
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  Speaker 3: other and processes that probably don't allow cross checking. And
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  Speaker 3: the numbers of customers are so vast that there is
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  Speaker 3: I think a real risk of more customers being affected.
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  Speaker 2: Is this a case, Bodo of an unintended consequence of
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  Speaker 2: going after them for breaking a rule, like the Commas
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  Speaker 2: Commission quite rightly sees a rule has been broken and
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  Speaker 2: punishes them. But then the unintended consequences that we all
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  Speaker 2: pay more for insurance.
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  Speaker 3: Yeah, I think there is a real risk of this.
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  Speaker 3: I'm trying to see the silver lining in the story
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  Speaker 3: and the obvious. The first result is obviously that this
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  Speaker 3: multi policy discount will disappear, which is negative. But you know,
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  Speaker 3: the silver lining I think for consumers is that this
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  Speaker 3: will actually make the insurance sector more transparent, so it's
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  Speaker 3: easier to compare single policies and switching insurance policies. Isn't
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  Speaker 3: that difficult if you put a little bit of time
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  Speaker 3: behind it. You know, you can sometimes say humong is
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  Speaker 3: amounts of money. So yes, it is none in the
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  Speaker 3: consequence that this discount will disappear. But I think Tower
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  Speaker 3: will be in a position where they will really have
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  Speaker 3: to look at their policy the premiums basically because they
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  Speaker 3: are scoring below average on customer satisfaction. I think they're
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  Speaker 3: at real risk of losing customers US when this multipolsa
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  Speaker 3: discount disappears. So they would do really well to sharpen
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  Speaker 3: their pencils but do.
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  Speaker 2: You have any opinion on the price of butter, because
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  Speaker 2: I know you're a man who is across all of
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  Speaker 2: these things right now. Have you looked at the situation
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  Speaker 2: with the butter meeting with Nichola Willis and Miles Harrell
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  Speaker 2: and thought, how on earth Nichola can get out of
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  Speaker 2: this site with you know, saving face.
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  Speaker 3: Yes, I haven't looked into it. I've been overseased for
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  Speaker 3: a while. But I think my basic sense is that,
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  Speaker 3: you know, at one point we used to have the
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  Speaker 3: world's the ninth largest dairy producer in the world in
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  Speaker 3: this country I e. Fonterra, and I'm always kind of
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  Speaker 3: kind of gobsmacked why dairy products are so incredibly expensive
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  Speaker 3: when you compare them with prices overseas. I do realize
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  Speaker 3: that in the you many of the dairy products are
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  Speaker 3: subsidized through through Texas obviously, and so it's not fair
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  Speaker 3: to just compare the retail price, because actually sometimes the
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  Speaker 3: real retail price in Europe is artificially lower through subsidies.
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  Speaker 3: But it does strike me as odd that we're paying
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  Speaker 3: so much, and I think the rationale of saying, well,
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  Speaker 3: this is what we can get on the export market.
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  Speaker 3: He doesn't wash well because there's obviously other costs involved
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  Speaker 3: in getting products to the export market, which we don't
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  Speaker 3: incur when we sell domestically.
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  Speaker 2: All right, Bodo, thanks very much, Bodo Lang, marketing professor
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  Speaker 2: at Massi University. There's a solution. How about we do
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  Speaker 2: what they do in the EU and we subsidize the
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  Speaker 2: price of butter. So if we all just pay a
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  Speaker 2: little bit more tax, then the butter will come down
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  Speaker 2: in price. You like the idea of that, No me neither.
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