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Here’s how to negotiate favourable premium increases

Ask most people what they want from a partner, lover, friend and the one common answer will be loyalty. Your insurer is no different – believe it or not but this characteristic, or lack thereof, is something that could affect your premiums over the long run.

Celeste Von Metzinger, Head of Personal Lines at Risk Benefit Solutions Pty Ltd (RBS) says that it is your right, as a consumer, to attempt to avoid annual premium increases by moving between insurers. This is, however, a short term solution that could affect your risk profile in the long run.

“Insurers often offer new customers lower premiums at the start of their contract, as a way of attracting new clients,” explains Von Metzinger. “After the first year, as the cover continues, insurers will adapt premiums proportionately, as a means to accommodate the customer’s risk profile.”

Consider this before putting in a claim

Before deciding to take advantage of this low, introductory offer at the next insurer it is wise to consider the fact that your current insurer is likely to want to negotiate. Von Metzinger reminds that insurers are often willing to do what they can to retain existing clients. So, depending on your risk profile and claims history, you definitely should have some leverage to negotiate lower premium increases after the first year.

While it is true that if you decide to negotiate with your current insurer, it will likely do all it reasonably can to accommodate you, especially if you can prove that you are a lower risk. This offer is unlikely to ever match the introductory premium that you will be offered when first joining an insurer though, and always gunning for that super low intro premium will affect your risk profile eventually.

Von Metzinger explains: “If the insurer does its homework, it will ask where you were insured before, check your claims history and factor in the likelihood that you will move to a new insurer later on, in to your risk profile. Usually, a new client that seems to have a tendency of jumping between insurers, would alert the company to the specific risk profile and loadings might be applied if it is not a pristine risk. This will again affect your introductory premium, as well as the kind of leverage and premium increases that you can expect down the line.”

What are more effective ways of managing your premiums?

Keeping steady.resize

#1 Have additional valuations and risk assessments done

Getting a qualified third party to do an additional risk assessment and valuation will go some way in showing your insurer that you are considering risk mitigation measures and it will assist you in negotiations with your insurer.

Bonus! These extra measures are useful for you as a policyholder to ensure that your risks are being managed correctly. If you ever have to claim and it is found that the damage or loss occurred as a result of your security measures not being what was expected to be in place for instance, your claim may be rejected.

#2 Consider insuring through a broker

According to Von Metzinger using a broker is often more beneficial than taking out direct insurance. The broker knows what to ask for, and what to point your attention to in terms of policy exclusions, possible risks and how to structure policies and premiums to meet your needs while considering what you  can afford. If your broker manages their portfolio effectively they will be able to negotiate more favourable terms and rates.

#3 Focus on your insurer’s risk mitigation measures

Implementing some, or all, of the risk mitigation measures required by your insurer will help you achieve a more competitive premium. Examples of these mitigation measures typically includes extra security, cameras, alarms and electrified fencing linked to armed response.


Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart. Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.

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