Such promotions are for the most part harmless. However, when applied to the financial services industry they become somewhat more dangerous.
The issue of gimmicks and special offers came to mind earlier this month when Royal Bank of Scotland announced it was scrapping its teaser rates on home insurance policies.
This is something I’ve been quite vocal on in the past. While introductory offers and special offers may have a place in the supermarket, in financial services were customers are entering into serious financial agreements they are not suitable.
Far too many customers have been enticed by teaser rates in the past only to have their premiums hiked just a few months into the contract.
The decision by RBS and NatWest to stop this practise should be applauded. The lenders will now offer a new type of home insurance that has a fixed premium price for three years. While I’m not entirely convinced this will lead to more customers getting a fair deal (there will always be customers who stick with their provider through apathy, despite price hikes, and those who actively look around for a better deal) it is good to see such prominent names in the industry taking a stand against unfair teaser rates.
As a sector we should be doing more to enlighten our clients to the benefits of good insurance policies rather than trying to entice them with flashy offers that will soon expire. Make sure your customers understand the consequences of being inadequately insured and how paying for good insurance can offer them the security they desire. Surely there is no greater enticement than the promise of peace of mind.
