RBS freezes home insurance premiums for three years as part of ban on 'teaser' rates
No one likes insurance companies, but they are a necessary evil and could save many tears (and ££s) should something go wrong. However, state-backed RBS group (which includes NatWest) have now come out with a controversial new policy of fixing insurance premiums for three years- as part of its move towards greater transparency and away from 'teaser' rates.
Teasing is pretty much industry-standard in the insurance industry- new customers get a shiny new, lower rate for their insurance to encourage them to switch from their current provider, in the hope that said new customer will be too busy to think about shopping around for better prices when the renewal comes up, not realising that their renewal price is far from competitive- or at least not competitive when compared with other insurers' new customer rates anyway. However what RBS are doing is to state that, unless you change the terms of your insurance or move house, they guarantee that your home insurance premium will remain the same for the two renewals following your initial insurance purchase.
This is actually part of a wider strategy by RBS to try and be more upfront and honest about stuff. Its savings accounts no longer have bonus rates, and existing customers can obtain the same rates as newbies. Similarly, their credit cards no longer have a lengthy interest-free period followed by a 12%+ ongoing rate- instead the rate is a steady 6.9% for the whole time. It's a bit of a gamble, but will it work?
Assuming you are happy with the home insurance quotation you get, knowing the price won't change for three years could offer comfort for those on fixed budgets. However, if the initial price is higher than could be obtained by switching between new customer rates, yould have to weigh up whether you would take the time to shop around again next year, or whether the three-year cost would work out cheaper than moving on to 'old' customer rates. And what if this caught on across the industry? Would you prefer more transparency or are you someone who does switch every year to take advantage of teaser rates? If this was the standard practice you'd be no better off than those lazy sorts who can't be bothered to compare prices. Or are we all happy to be duped by introductory rates anyway?
Lastly though, is RBS/NatWest insurance any good? Our friends over at Which!!!, who incidentally "really like" the whole idea say that RBS/NatWest have strong buildings and contents insurance policies, giving them an "impressive" score of 76% , although they do note that their customer service scores "aren't the best in the market".