Scratch the itch to switch

We're a nation of lapsed switchers, but now it's time to take up this powerful consumer weapon again – writes Charlie Weston.

There was a time during the late boom years when the switching providers 'culture' really took off across a range of services thanks to market deregulation (telecoms, electricity and gas) and the introduction of switching codes (banking).

But for whatever reason, folks are not switching in anywhere near the same numbers as back then, even though today it's never been easier to switch. Consumer inertia may have something to do with it, but with prices rising all the time, particularly for insurance, now is the time to take action and save.


Premiums for motor insurance have shot up by some 25pc so far this year, according to the Central Statistics Office, while the cost of home insurance cover has risen by around 5pc.

The rises in motor cover mean that a policy that was priced at €500 last year now costs €622 to renew, on average. Insurers have blamed higher premiums on increased awards being made in the courts due to a rise in the size of award that can be made in the circuit court.

It might seem that switching to a cheaper provider might not prevent you paying more for your insurance than last year, but since the indications are that premiums are rising across the board, the incentive to switch should be higher than ever, according to Dermott Jewell of the Consumers Association of Ireland.

"As the prices increase it is now more important than ever that we take the time to try and source a better deal that has a reasonable excess and no-claims benefits," he said.

"It would be a huge concern if prices across the market started to converge as that would raise questions of competitiveness and lack of transparency." Motor insurance is by far the most common service for which Irish consumers will switch not least because, unlike other sectors, you can often get a better price from your existing provider simply by threatening to switch. There is no loyalty any more when it comes to motor insurance, and for home insurance. It's easy to get quotes, and there are brokers who can source the best value across nearly all the providers in the market.


While motor insurance ranks as the most commonly switched service, there are signs that an enduring switching culture has infiltrated electricity and gas, too.

Switching activity among energy suppliers has remained relatively steady, according to the Commission for Energy Regulation, with 14pc of electricity and 17pc of gas customers choosing to switch last year.

It mightn't sound like that much, but in fact it represents around 283,000 electricity switches and 109,000 gas switches.

"What is interesting is that the usual events that drive people to switch have been absent," said Simon Moynihan of price comparison site Bonkers.ie "In previous years, big price increases and changes in the PSO (public service obligation) levy motivated people to look for better deals. Over the past year, we have seen a number of small price decreases instead, which normally wouldn't encourage switching".

However, he says that the introduction of bigger discounts for new customers (up to 20pc in some cases) has driven switching activity, along with special offers and perks, such as heating controllers, loyalty points and even bill credits up to €100.

"It's the big discounts and special offers which are enabled by lower wholesale prices that are the most striking, and I think these are attracting people to switch."

For example, a customer on standard rates is now paying €1,206 a year for electricity. "By switching to the best deal, that customer can knock €189 off that. If a customer goes for one of the cashback deals, the savings can go up to €232 (Bord Gais Energy 10pc electricity discount plus €100 cashback whenever you want)."


Nearly ten years ago, the Central Bank introduced a code on switching that obliged banks to make the process of switching providers much easier and quicker for consumers. This resulted in a huge spike in the numbers of people switching banks, but these days banks are among the least popular services to switch. But it's not as if banks have made things harder in the meantime.

"Switching banks is easier than ever and I would encourage anybody to do it at least once," says Frank Conway of Irish Financial Review, who recently did an analysis of bank fees showing that it was possible to avail of free or nearly-free banking if balances were kept above each of the banks' respective limits.

"Banks are required to comply with the Central Bank code on switching so any fears that account holders may hold about it being a lengthy and complex process are unfounded.

"Banks must complete the process within a set window of 10 days, and account holders can set the date from which the new account is activated and the switching process is completed."

He adds that banks sense that consumers are reluctant to switch but, until they do, the fees and charges charged by some banks will continue to be higher than they should be. "Customers must walk before banks will be prepared to talk...with lower fees and charges".


The biggest barrier to switching mobile tariffs is the sheer, head-wrecking number of them.

"Mobile phone plans are notoriously difficult to compare - there's a huge range of options out there, and understanding your own usage of calls, texts, and data is really important to ensure you are not getting ripped off," said Shane Lynn of Killbiller, an app that compares tariffs based on information from your usage profile.

While only around 10pc of people switch mobile operators each year, research from the National Consumer Agency in 2014 indicated that switching mobile providers resulted in an average annual saving of €292.

"With increased competition from new mobile services from Postmobile, iD mobile, and soon Virgin mobile, it's a great time for mobile operator switching in Ireland," says Lynn.

"Mobile usage patterns are changing too, with people using almost twice as much data as this time last year (1.8 GB per month). For a lot of people, this means that their existing plan might not be optimal anymore - there's a huge amount of money being wasted through allowances being under or over used by people."

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