Admiral’s move to automatically give motor customers back £25 during lockdown has been handsomely rewarded by a surge in brand loyalty and renewals.
Admiral announced its Stay at Home refund in April, becoming the first – and it turned out only – insurance brand to put money in its customers’ bank accounts without them having to lift a finger.
This time last year Admiral’s customers were amongst the most fickle of the bunch, with 85.9% shopping around at renewal, above the market average of 83.1%.
Only 14.1% renewed without shopping around, compared to a market average of 16.9%.
But data from our Insurance Behaviour Tracker tool reveals a step change. As many as 21.4% of Admiral customers renewed their car insurance without shopping around in the four months to July.
Whilst the number of people renewing without shopping around has increased overall in this period from 16.9% to 17.6% (a behaviour linked to vulnerability), Admiral’s turnaround is bigger than that. It has gone from market lagging to market beating.
The reasons Admiral’s renewing customers gave for doing so also point to the positive brand effects of the £25 in their bank accounts. As many as 40% said “I like the company I with” was one of their reasons for renewing. It was the most commonly given answer and was given by more people than couldn’t be bothered (22%) and that the price was about the same (28%).
By contrast, this time a year ago only 18.2% of motorists who renewed automatically with Admiral said they did this because they liked their provider. The passive renewals of those who couldn’t be bothered to shop around were much higher.
The refund had more sway with middle aged and older drivers, to whom £25 would have felt like a more significant chunk of their annual premium. The data suggests that only 11.3% of Admiral customers aged 18-34 renewed without shopping around.
Baby think twice
Admiral built on its non-shopping renewal rates with a willingness to lower its prices to existing customers who asked for discounts.
Of the Admiral customers who shopped around and decided to renew, 51% said they were offered a lower premium (market average 37%) and 22% said Admiral price matched a cheaper quote they’d got from another provider (market average: 15%)
That meant it retained a whopping 76% of customers that shopped around. To put that in context only 51% of customers that shop around for car insurance end up sticking with their existing provider.
Price is probably only part of the picture for the more price conscious too. The number of Admiral customers who agree with the statement “I believe this provider cares about its customers” increased from 46% to 62% in a year.
Was it worth it?
Aside from the warm feelings and a rare example of a loud and clear reputational win from an insurance firm during Covid, Admiral now has an enviable retention rate of c. 81%, compared to 68% a year ago.
The refunds to its 4.4 million car and van insurance customers cost £110m. Reduced claims due to fewer journeys and quieter roads will pay for much of that. But the uplift in retention means it could save on acquisition costs for around half a million motor customers.
The move may have even had an impact on home customers, who were not part of the refund, with Admiral’s retention rate increasing by 10 points to 68.3% in a year, once again moving from below market average to handsomely beating it.
Across the Atlantic the populist customer refund movement was seized upon by several leading US brands. Over here Admiral moved alone and didn’t have to share the spotlight. This could be the beginning of a long term halo effect.
Understand consumer behaviour throughout the renewal process
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Insurance Behaviour Tracker (IBT) is the most comprehensive insurance focused consumer survey in the market. It provides insight and understanding of consumer behaviour throughout the renewal process, giving you a view of market trends, and brand performance. This will enable you to make informed decisions to allow you to build robust marketing and business plans and track results.