The banks have extended their ‘Fairer Banking’ policy with three-year fixed home insurance deal.
NatWest and Royal Bank of Scotland (RBS) have announced they intend to scrap ‘teaser rates’ on their home insurance policies.
From 9th September the banks will give those looking for buildings and contents cover their best price fixed for three years, instead of one.
Normally home insurance providers offer their cheapest deal on premiums in the first year to lure customers in, only to hike the cost when it comes to renewal 12 months down the line.
But according to the banks’ research 70% of customers don’t shop around for new home insurance once their introductory offer ends. This means the majority renew automatically and so end up paying more.
Three-year fixed home insurance
NatWest and RBS believe a three-year fixed price deal is simpler and fairer.
The new fixed rate home insurance deal is intended to give customers peace of mind, help them budget better over the long term and take away the hassle of looking for a new deal every year.
The banks say the cost of the policy will remain the same as long as no claims are made during the fixed period. But the risk with going for this type of deal is that if home insurance prices fall generally, you won't be able to benefit as quickly as others, unless it coincides with your renewal.
Lloyd Cochrane, head of mortgages and protection for RBS and NatWest, said: “We want to help customers out, not catch them out. The home insurance industry is dominated by companies offering introductory offers and teaser rates and we don’t think that’s fair.
“We want our customers to be offered our best price every year, not just in the first year. Removing another teaser rate and changing the way we offer insurance is another step towards earning back our customers’ trust.”
Giving customers a fairer deal
Home insurance is the latest product to be overhauled by NatWest and RBS as part of their ‘Fairer Banking’ strategy.
The campaign was introduced in February last year by RBS CEO Ross McEwan to help the state-backed banks regain customer trust.
In practice the new standards mean treating new and existing customers the same regardless of how they bank and offering simple, fair and transparent deals.
In line with these new principles the bank has taken a stand against so called ‘teaser rates’, which can carry a sting in their tail if customers don’t pay attention to when introductory offers end.
So far the banks have focused on savings accounts and 0% credit cards.
Both no longer offer savings accounts which come with a temporary bonus rate as these only boost returns for a short period, before falling away, leaving those that don’t switch with ‘zombie’ accounts earning a pittance on their cash. The banks claim that scrapping these teaser rates has led to 4.5 million customers getting a higher return overall as a result.
NatWest and RBS have also scrapped 0% teaser rates on balance transfer and purchase credit cards. So instead of deals that are interest free for a set period of time the banks now offer one credit card with a simple low rate that won't catch people out.
NatWest and RBS are now giving home insurance the Fairer Banking treatment and could cause other providers to react.
Does fixing your home insurance deal appeal to you or do you prefer to shop around every year? Let us know in the comment section below.
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