1 00:00:00,200 --> 00:00:03,760 Speaker 1: Tower Insurance is getting rid of the old multi policy discounts. 2 00:00:03,760 --> 00:00:05,560 Speaker 1: This is the discount that you get on your premiums 3 00:00:05,600 --> 00:00:07,440 Speaker 1: if you have some combo of your house and your 4 00:00:07,480 --> 00:00:09,680 Speaker 1: car and your contents, or other different kinds of insurance 5 00:00:09,720 --> 00:00:12,720 Speaker 1: all with the same company. Tower and other insurers have 6 00:00:12,760 --> 00:00:15,280 Speaker 1: been fined in the past for failing to apply the 7 00:00:15,280 --> 00:00:18,520 Speaker 1: discount correctly, and Tower's CEO says there's now an unacceptable 8 00:00:18,600 --> 00:00:20,400 Speaker 1: risk it might happen again if they keep it, so 9 00:00:20,440 --> 00:00:22,800 Speaker 1: they're getting rid of it. Bodo Lang is a marketing 10 00:00:22,800 --> 00:00:26,599 Speaker 1: professor at Massi University. Evening, Bodo, Good, Evening. I struggle 11 00:00:26,640 --> 00:00:28,120 Speaker 1: to believe that the risk is so high. 12 00:00:28,200 --> 00:00:31,920 Speaker 2: What do you think, Well, it does seem surprising that 13 00:00:31,960 --> 00:00:34,159 Speaker 2: this error occurs in the first place, But if you 14 00:00:34,159 --> 00:00:37,159 Speaker 2: look at the customer numbers, you know they've got hundreds 15 00:00:37,159 --> 00:00:40,839 Speaker 2: of thousands, sometimes millions of customers and you only need 16 00:00:40,880 --> 00:00:43,320 Speaker 2: a small number. You know, in the numbers I've seen, 17 00:00:43,360 --> 00:00:47,240 Speaker 2: it's literally zero point zero one percent, and that's enough 18 00:00:47,280 --> 00:00:51,239 Speaker 2: customers for the Commerce Commission to swing interaction. And that 19 00:00:51,320 --> 00:00:53,920 Speaker 2: obviously is a huge risk for these large insurers. 20 00:00:54,280 --> 00:00:56,000 Speaker 1: But how would it even happen? I mean, would it 21 00:00:56,040 --> 00:00:58,480 Speaker 1: be a case that Bodo has taken out all this insurance, 22 00:00:58,720 --> 00:01:01,600 Speaker 1: but they haven't linked all of bodos different insurances together 23 00:01:01,720 --> 00:01:04,880 Speaker 1: in order to realize that he deserves a discount. Is 24 00:01:04,880 --> 00:01:05,720 Speaker 1: that how it happens. 25 00:01:06,480 --> 00:01:08,039 Speaker 2: I think that's what it is. And I think what 26 00:01:08,120 --> 00:01:11,000 Speaker 2: these large insurers really struggle with is that they have 27 00:01:11,120 --> 00:01:14,120 Speaker 2: often legacy systems that don't talk to each other. So 28 00:01:14,160 --> 00:01:16,360 Speaker 2: they might have different divisions, They might have bought a 29 00:01:16,440 --> 00:01:20,399 Speaker 2: life insurance division that is on a different system, and 30 00:01:20,480 --> 00:01:23,039 Speaker 2: so these systems often don't talk very well to each other. 31 00:01:23,200 --> 00:01:25,920 Speaker 2: And it's not just a system but also a process issue. 32 00:01:26,280 --> 00:01:28,520 Speaker 2: If you and me opened an insurance company, we would 33 00:01:28,520 --> 00:01:31,840 Speaker 2: probably start from the ground up with some integrated, clever system. 34 00:01:31,920 --> 00:01:34,280 Speaker 2: But that's not how these companies started off with. So 35 00:01:34,840 --> 00:01:37,679 Speaker 2: they've got old systems that don't really speak to each 36 00:01:37,680 --> 00:01:41,200 Speaker 2: other and processes that probably don't allow cross checking. And 37 00:01:41,280 --> 00:01:43,880 Speaker 2: the numbers of customers are so vast that there is 38 00:01:43,920 --> 00:01:46,640 Speaker 2: I think a real risk of more customers being affected. 39 00:01:47,000 --> 00:01:50,200 Speaker 1: Is this a case, Bodo of an unintended consequence of 40 00:01:50,240 --> 00:01:52,600 Speaker 1: going after them for breaking a rule? Like the commuis 41 00:01:52,640 --> 00:01:54,840 Speaker 1: commission quite rightly sees a rule has been broken and 42 00:01:54,840 --> 00:01:57,280 Speaker 1: punishes them, but then the unintended consequences that we all 43 00:01:57,280 --> 00:01:58,320 Speaker 1: pay more for insurance. 44 00:02:00,040 --> 00:02:02,600 Speaker 2: I think there is a real risk of this. I'm 45 00:02:02,600 --> 00:02:04,800 Speaker 2: trying to see the silver lining in the story and 46 00:02:04,920 --> 00:02:07,320 Speaker 2: the obvious that the first result is obviously that this 47 00:02:07,440 --> 00:02:11,520 Speaker 2: multipolicy discount will disappear, which is negative. But you know, 48 00:02:11,600 --> 00:02:14,520 Speaker 2: the silver lining I think for consumers is that this 49 00:02:14,560 --> 00:02:18,480 Speaker 2: will actually make the insurance sector more transparent, so it's 50 00:02:18,520 --> 00:02:23,720 Speaker 2: easier to compare single policies and switching insurance policies. Isn't 51 00:02:23,919 --> 00:02:28,240 Speaker 2: that difficult if you put a little bit of time 52 00:02:28,280 --> 00:02:32,320 Speaker 2: behind it. You know, you can sometimes say humongous amounts 53 00:02:32,320 --> 00:02:36,040 Speaker 2: of money. So yes, it is none in the consequence 54 00:02:36,080 --> 00:02:39,519 Speaker 2: that this discount will disappear. But I think Tower will 55 00:02:39,560 --> 00:02:41,720 Speaker 2: be in a position where they will really have to 56 00:02:41,760 --> 00:02:46,120 Speaker 2: look at their policy the premiums basically because they are 57 00:02:46,520 --> 00:02:49,720 Speaker 2: scoring below average on customer satisfaction. I think they're at 58 00:02:49,800 --> 00:02:54,680 Speaker 2: real risk of losing customers when this multipolicity discount disappears, 59 00:02:54,720 --> 00:02:57,239 Speaker 2: So they would do really well to sharpen their pencils. 60 00:02:58,040 --> 00:03:00,320 Speaker 1: But do you have any opinion on the price of butter? 61 00:03:02,680 --> 00:03:04,560 Speaker 1: Because I know you're a man who is across all 62 00:03:04,600 --> 00:03:06,080 Speaker 1: of these things right now. Have you looked at the 63 00:03:06,120 --> 00:03:08,639 Speaker 1: situation with the butter meeting with Nikola Willis and Miles 64 00:03:08,639 --> 00:03:11,560 Speaker 1: Harrell and thought, how on earth Nichola can get out 65 00:03:11,600 --> 00:03:13,760 Speaker 1: of this site with you know, saving face. 66 00:03:14,800 --> 00:03:17,560 Speaker 2: Yes, I haven't looked into it. I've been overseas for 67 00:03:17,560 --> 00:03:20,960 Speaker 2: a while, but I think my basic sense is that, 68 00:03:21,120 --> 00:03:22,919 Speaker 2: you know, at one point we used to have the 69 00:03:22,960 --> 00:03:27,280 Speaker 2: world's the ninth largest dairy producer in the world in 70 00:03:27,320 --> 00:03:30,360 Speaker 2: this country I e. Fonterra, and I'm always kind of 71 00:03:30,840 --> 00:03:34,000 Speaker 2: kind of gobsmacked why dairy products are so incredibly expensive 72 00:03:34,080 --> 00:03:37,480 Speaker 2: when you compare them with prices overseas. I do realize 73 00:03:37,480 --> 00:03:40,480 Speaker 2: that in the you many of the dairy products are 74 00:03:40,480 --> 00:03:45,280 Speaker 2: subsidized through through Texas obviously, and so it's not fair 75 00:03:45,360 --> 00:03:48,400 Speaker 2: to just compare the retail price, because actually sometimes the 76 00:03:48,400 --> 00:03:52,800 Speaker 2: real retail price in Europe is artificially lower through subsidies. 77 00:03:53,200 --> 00:03:55,240 Speaker 2: But it does strike me as odd that we're paying 78 00:03:55,280 --> 00:03:59,040 Speaker 2: so much, And I think the rationale of saying, well, 79 00:03:59,080 --> 00:04:00,880 Speaker 2: this is what we can get on the export market 80 00:04:01,280 --> 00:04:05,160 Speaker 2: doesn't wash well, because there's obviously other costs involved in 81 00:04:05,200 --> 00:04:07,920 Speaker 2: getting products to the export market, which we don't incur 82 00:04:08,000 --> 00:04:09,600 Speaker 2: when we sell domestically. 83 00:04:09,120 --> 00:04:11,920 Speaker 1: All right, Bodo, Thanks very much, Bodo Lang, marketing professor 84 00:04:11,920 --> 00:04:14,480 Speaker 1: at Massi University. There's a solution. How about we do 85 00:04:14,520 --> 00:04:16,920 Speaker 1: what they do in the EU and we subsidize the 86 00:04:16,960 --> 00:04:19,080 Speaker 1: price of butter. So if we all just pay a 87 00:04:19,080 --> 00:04:21,560 Speaker 1: little bit more tax, then the butter will come down 88 00:04:21,600 --> 00:04:24,040 Speaker 1: in price. You like the idea of that, No, me neither. 89 00:04:24,760 --> 00:04:27,960 Speaker 1: For more from Heather Duplessy Allen Drive. Listen live to 90 00:04:28,000 --> 00:04:31,039 Speaker 1: news talks. It'd be from four pm weekdays, or follow 91 00:04:31,080 --> 00:04:32,800 Speaker 1: the podcast on iHeartRadio.