Nearly 60% of people have no plans to switch financial provider for better value in 2022

• Few plan to switch mortgage provider this year (7%)
• 55+ age group are most likely to stay with their current provider because it’s “easier” (19%)

58% of Irish consumers have no plans to switch their financial providers in 2022, despite inflation and other factors pushing costs upwards. This is among the primary findings from a new survey by leading protection provider Royal London. The survey of 1,000 respondents nationwide conducted by iReach, aimed to gain an insight into people’s attitudes towards switching providers for their financial products, whether they plan to switch in 2022, and what their main motivation to do so might be. 

Speaking of the findings, Sara Murphy, Marketing Lead at Royal London, commented,

“The most striking finding from our survey is that more than half of respondents say they have no plans to switch financial providers in search of better value this year. This included their mortgage and pension provider, and their insurance providers for life, health, car and home cover. This reluctance to switch could mean consumers  miss out on better value and cost-saving deals from other providers. I’d say that in the majority of cases, consumers would get better value on at least one of the six products and services we listed in our survey by switching.”

Royal London survey respondents were asked: Have you any plans to switch financial provider in search of better value in 2022?

• No plans                                          58%
• Yes, car insurance                        27% 
• Yes, home insurance                   20%
• Yes, health insurance                 14%
• Yes, my mortgage                         7%
• Yes, life insurance                        6%
• Yes, pension savings                   5%

Ms. Murphy went on to say,

“If we move our focus to the more positive findings of the survey, we’ll see that four in ten people are considering switching providers this year. For most, this will mean looking at their car insurance (27%) or their home insurance (20%). Just 14% plan to look for a better deal on their health insurance, while half that number (7%) say they’ll look at switching their mortgage provider. By moving, it’s possible to save hundreds of euro on health insurance* and this can run into thousands on mortgages** over the full term of the plan. Given the savings it’s possible to make, a very low amount of people intend to assess their options in search of a different provider with better value. Not doing this exercise periodically could mean they are missing out on reaping the rewards.”

Buyer Behaviour

Royal London survey respondents were asked: Which of the following events, if any, would be most likely to prompt you to look around for a better deal on your financial products – like mortgage, insurance, pension savings etc.?

• If the price/repayment goes up substantially                               43%
• When it’s time to renew, I always look at what’s available      36%
• If I read something about lower prices on a particular
  financial product                                                                                      24%
• If I hear of better value from a friend or colleague                     21%
• If the price/repayment goes up slightly                                          20%
• I don’t tend to shop around – I mostly just stick with
  my current provider as it’s easier                                                      14%
• Advertising from a provider                                                                 10%

Ms. Murphy went on to comment,

“We wanted to gain an understanding of what motivates people to look around for a better deal on their financial products. Unsurprisingly, an increase in price either slightly (20%) or substantially (43%), will prompt most people to shop around (63%). The second biggest prompt for consumers to move is after they get their notice to renew (36%).  The media that people consume can also trigger them to act - almost one in four people said that if they read about lower prices being available elsewhere that would prompt them to shop around.

“Our survey results show that those in the 55+ age group are more inclined to stay with their current provider because they think it’s “easier”. Unfortunately, this is likely to cost them more money in the long run as they may miss out on some of the benefits of switching providers which can include better rates and special offers for new customers.”

Why Switch?

Royal London points to a 2020 review into mortgage switching from the Central Bank** which estimated that three in every five ‘eligible’ mortgages for principal dwelling homes stood to save over €1,000 within the first year if they switched, and more than €10,000 over their remaining term.

Ms. Murphy continued,

“This publication highlighted the low levels of switching activity within the mortgage market. Our survey results back up this sentiment with just 7% of people saying they have plans to switch mortgage provider this year. This is despite Ireland’s mortgage providers offering low rates, particularly over a fixed term to attract consumers to move^.

“For most people, mortgage debt is the biggest form of credit they will have in their lives so the benefit of reducing this debt cannot be undervalued. Particularly when research from a 2020 Royal London survey^^ found that 31% of people in Ireland said they’ll be paying their mortgage past the age of 65 – a time when most will be relying on their income and savings to fund their retirement.

Ms. Murphy commented,

“The latest Consumer Price Index shows prices were on average 5.5% higher in December 2021 compared with December 2020 – representing the largest annual change in prices since April 2001 (+5.6%) #. Now more than ever, people should take advantage of the value of shopping around in order to get the best deal available to them.

“One of the barriers that may prevent people from switching is that they don’t think it will be easy or worth the hassle. Or they may be hesitant about changing over to a new provider or a plan in case it might not work as well as their current arrangement. However, switching and set up processes are very streamlined these days and may be much easier than you think. It can certainly be worth it financially to review the market, either yourself or through a Financial Broker, for the best value. If you are looking for advice about life insurance or your financial planning, we would always recommend speaking with a Financial Broker as they can not only help save you time and money but will also make recommendations based on your individual needs and circumstances.”

ENDS