With more people working from home since lockdown, expectations and attitudes relating to bill increases in utilities, telco and insurance have changed.  

A recent DBM Consultants study* shows that the COVID-19 pandemic has impacted and evolved consumer lifecycles, attitudes, expectations and behaviours across utilities (electricity, gas and water), telecommunications (mobile and internet) and insurance (home, motor and health).

As working from home increased, so did bills

The marked increase in working from home during 2020, likely to be maintained to some extent through 2021, has changed the way consumers interact with their service providers. Since the pandemic began, almost 1 in 2 consumers are working from home to some extent, and 16% do so more now than they did before.

It is no surprise that with more people working from home, consumers are likely to have seen an increase in their bills since lockdown, with the greatest impacts seen in utilities and home insurance.  Health insurance holders are also the most likely to have experienced (or perceived) a premium or bill increase in 2020.

 Telcos appear to have mostly kept their prices stable during the COVID crisis, and free data that was offered to customers may have helped ease perceptions of any price increases, where premiums and bills increased by 20%-40% in other service categories.  For utilities, these increases are most likely due to increased usage as people spent more of their time within the home.

Unsurprisingly, home internet has seen the biggest uptick in use as a result of COVID, with 58% of those who are working from home saying their home internet usage has increased.

Increased bills don’t necessarily mean increased switching

Even though bills and premiums have going up, it doesn’t mean consumers are leaving their current providers.

 On average, half of consumers have switched service providers, and this is more likely to be providers of mobile phone services, motor insurance, or electricity. Aside from price, factors inducing switching include overall value for money, product and service quality and reliability.

Those who are looking to switch right now are more likely than those who are always looking around to say they have been irritated by their provider (26%) and that their contract is almost up (27%).

More than half of consumers said if they were to shop around, it would be for a better deal, seeing what else is out there (33%), and keeping their current provider honest (24%). Perceived value for money is key for telco and insurance, while service stands out for utilities.

Consumers are careful to choose a brand they trust for insurance, which makes sense during a pandemic, particularly for health insurance and home insurance. Trust is less important for motor insurance which could indicate that consumers may consider a wide range of contenders for this category of insurance.

However, there remains inertia amongst consumers when it comes to changing providers. The majority of consumers say they did not consider switching even after receiving a higher-than-expected bill. It typically takes a bill 25-50% higher than usual to push consumers into action.

 The study showed that the vast majority of consumers have no intent to switch service providers in the near future, with the search for a better deal the main catalyst for those seeking out other providers. Home and motor insurance are most likely to be reviewed at renewal time, whilst health insurance is currently more likely to be reviewed at any time, likely driven by a lack of ‘renewal’ point in health insurance policies.

For those not considering a switch, switching is considered “too much effort”. Other consumers concerned about risk are not willing to go through potential service disruptions that may result from switching providers. Yet other segments in the study stated they were not willing to lose their current “good value legacy plan” or were “not irritated enough to switch.”

Factors that drive switching

For those who are looking to switch, a combination of push and pull drives change of provider:

• a change of circumstance, such as moving home, a new phone or a new car
• seeking out better deals or price
• word of mouth from family and friends.

While price does indeed drive switching (and best price remains a lower-ranked driver of loyalty), it is ultimately the service, reliability and value for money that encourage loyalty to the current provider.

For more information about the Consumer Services Journey Lifecycle study, contact Adam Bottle, Director: abottle@dbmcons.com.au

*Consumer Services Journey Lifecycle December 2021, sample size 2,516.