Can money buy loyalty? Almost certainly not, particularly over the long-term. The Stoic philosopher Seneca provides a pithy reason why: “Loyalty that is bought with money, may be overcome by money”. However, in an industry dogged by high customer promiscuity, I argue that renewal pricing that favourably recognises customer tenure is a necessary but not sufficient condition to improve loyalty.

The recent report by Consumer Intelligence shows that after three years the average driver will overpay by £75 and a homeowner by £66. This can add up to sums in excess of £1,400 over a ten-year period [1]. What price loyalty, indeed. Further, Grant Thornton’s Customer Loyalty & Experience Index (CLIX) shows that GI & Life firms have the lowest loyalty level of the five industries surveyed.

An industry at odds?

Incumbents are seeing an increasing number of InsurTech firms looking to take chunks out of their value chain by improving customer experience. Our CLIX index shows that those who create great customer interactions benefit from enhanced customer ‘stickiness’ over the long-term. Consequently, insurers are pouring resources into these areas.

At present, in my opinion, a glaringly obvious and incongruent position exists. Insurers are trying to build the pyramid without the foundations by neglecting to establish loyalty-based pricing before/during their customer experience efforts. In an industry that bemoans price-dominated decision-making, this feels like a serious omission to strengthening customer bonds. Loyalty pricing is, therefore, one of the foundations on which to build superior customer experience and brand affinity.

Things money can’t buy

Of course, you must not solely rely on money to engender loyalty, insurers should certainly take heed of Seneca’s warning. However, getting these foundations right should help insurers boost the effectiveness of their investments in customer engagement strategies.

Further, the vast majority of insurance customers (84%) want to purchase their insurance in one place, if the insurer offers good prices [2]. Firms that can provide superior customer interaction and reward loyalty not only through cross-product sales but also over the customer lifecycle will set themselves apart from their rivals and for success in the future.

Loyalty over the long-term

Over the long-term, as InsurTech start-ups and incumbents fundamentally change the way we buy and pay for insurance, the concept of loyalty based on tenure may be eroded. Insurers that can base premiums on individual behaviour/experience or self-defined communities may engender loyalty through more accurate or fair pricing, instead of length of time.

We are already seeing start-ups like Simplesurance providing micro-insurance plug-ins at point of sale in retail journeys and Trov allowing customers to turn on and off cover as and when they need it.

Consequences of ignoring loyalty 

Firstly, insurers may experience negative publicity, especially if vulnerable customers are impacted. Indeed, Age UK found that 36% of customers over the age of 80 have never considered changing insurer and remained with their existing provider for 20+ years [3]. Stories of pensioners being ripped off for showing loyalty to a brand will not be well received by prospective customers.

Secondly, we are already seeing senior figures such as the former Pensions Minister, Ros Altmann saying that if insurers cannot explain large price increases when there has been no change in risk or tax rises then they should face a penalty from the regulator [4].


Overall, the fundamental disruption to the way we buy and pay for insurance will change how customer loyalty manifests itself. However, in current market conditions I believe that rewarding loyalty through the price mechanism lays the groundwork to build tighter bonds in areas where loyalty can be built at exponential rates (the claims process or service levels, for example).


[1] The Guardian 

[2] Consumer Intelligence 

[3] Age UK

[4] Insurance Business Mag