Consumers may be deciding that cheaper isn’t necessarily better when it comes to buying insurance.

Research into insurance buyers’ intentions shows that over 1.4 million personal lines policies are likely to be switched to another insurer over the next 12 months.

Previous surveys by Roy Morgan Research revealed consumers switched insurers because of price, but the company says this appears to be changing.

Industry Communications Director Norman Morris says new entrants that have broken into the market with lower-cost offerings are having some difficulties retaining customers, suggesting “something beyond pricing is prompting consumers to consider switching”.

“It is likely that customer service expectations could be somewhat of a challenge in some instances,” he said.

An Allianz spokesman told insuranceNEWS.com.au that many consumers have come to realise there is more to the overall value proposition of insurance than price.

“The survey indicates that for home insurance, the customers of some smaller, newer insurers are less likely to renew a policy with their insurer than the customers of larger, more established insurers, such as Allianz.”

Roy Morgan interviewers found that in the next 12 months 577,000 motor vehicle policies and 842,000 household policies will be renewed with another insurer, about 3.8% of the total market.

The research says about 29% of home policies won’t be renewed with NRMA Insurance, AAMI and Allianz but the companies with the highest proportions of policies unlikely to be renewed are Coles, at 7.5%, SGIC SA with 6.7% and ANZ with 6.2%.

The switching levels at the three biggest home insurers are much lower, with NRMA Insurance at 3.9%, RACV Insurance at 3.8% and AAMI at 3.6%.

“Although it is clear that larger brands are expected to lose a greater number of policies, they are not necessarily at risk in losing the highest proportion of their customers,” said Mr Morris.

“The current market highlights opportunities for those looking to expand their market share, but also highlights the need to protect territory and customers.”

About 33% of motor policies not likely to be renewed are with NRMA Insurance, AAMI and Allianz, but the largest proportion are likely to be from Suncorp-owned Bingle with 9.5%, SGIC SA with 8.6% and Real Insurance with 8.2%.

An NRMA Insurance spokesman says the insurer values customer loyalty and looks at making it worth customers’ while to stay with its direct insurance brands. 

This has prompted changes to the NRMA Insurance, SGIC and SGIO schemes to reward customers for loyalty.

“We’re rewarding customers who have the longest relationship with us by locking in their level of discount for life,” she told insuranceNEWS.com.au.