Saga’s three-year fixed-price commitment attracts more than half of its customers

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Exclusive: Saga has revealed that the three-year fixed-price promise has attracted more than half of its customers.

Gary Duggan, CEO of Saga Services, told Post that since the launch of the fixed-price promise “over half of the customers who have called up for quotes chose the fixed price product rather than the standard product”.

The initiative, launched at the beginning of May, is a part of Saga’s strategy to grow its direct channels by “launching highly relevant differentiated propositions into the UK market that fulfil the needs of our customers”.

According to Duggan, the fixed-price promise will help to improve the retention rates, as customers will likely stay with the insurer for at least three years.

He added that Saga’s retention rates are already quite high in the industry.

“I found that because of the strength of the brand, and because of the service that we deliver to our customers, customers will stay with us longer than they would with a typical aggregator player.”

Customer needs

The commitment follows Saga’s survey into customers’ needs, which launched last September.

The survey has identified that most of its customers value certainty, choice and transparency in insurance.

Duggan said: “While there is clearly a group of customers who want to take standard products from aggregators, a lot of our customers, especially the older ones, find the process of shopping around stressful.”

He added that for a lot of Saga’s customers, convenience is very important.

While the fixed-price promise addresses some of the issues highlighted by the Citizen’s Advice super-complaint, Duggan said that Saga’s offering is more about providing customers with a choice.

He said: “Some customers are more digitally savvy and enjoy shopping around to get the best deals, but some of them prefer to stay, so we provide them with an option.”

Duggan added that while Saga is making the three-year commitment to its customers, they are not obligated to stay with the insurer for three years.

“They can continue to shop around or they can stay and keep their premium at the same level.”

Cheaper prices?   

While customers buying through aggregator can “possibly” find cheaper prices elsewhere, their premium will potentially go up after the first year, Duggan said.

He added: “We can guarantee for our customers, especially those who are on pension and need to budget, that that price for motor and home insurance won’t go up for three years.”

However, the promise is not “about saving money, it’s about certainty and value”.

He said: “If there’s inflation, and if you look at different statistics, on motor claims the inflation is anticipated to be about 5% or 6% this year, customers can be safe in the knowledge that if premiums go up next year by 5% or 6% their premiums won’t if they stay with Saga.”

Talking about other players in the industry that try to address the challenge that industry is facing, Duggan highlighted Aviva and their Aviva Plus product.

“The difference we are seeing between our and Aviva’s product is that they have made a commitment that new customers will pay the same as existing customers, but they haven’t said what that price will be. We made a firm commitment around the price for the customers saying that the price you pay now will be the price you will pay for the next three years.”

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