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NZ Herald an Enthusiastic Supporter of "Churn"

The New Zealand Herald is an enthusiastic supporter of churn declaring "Power to the People as Kiwis Profit from Switching Providers" only this example is, of course, power companies. Later they trumpet a switching rate of 20% per year in Auckland. 

Let me stress that I am not equally happy with people switching insurance like they switch power: there are some significant structural differences between switching insurers, and switching power provider, of course. With power, the product is, frankly, as close to identical as it gets. With insurance it isn't. You cannot accidentally lose some coverage by switching power companies. The product is rarely so complex that you need advice. Insurance pools are such that customers that cannot switch could be trapped in a pool experiencing a 'death spiral' as the better risks leave the pool and prices must be repeatedly put up, encouraging more of the remaining people to leave.

What is important is that we recognise that consumers may not be aware of these differences. Many consumers think that switching is an unalloyed good - merely the way they get better deals and better products. This is a significant environmental head-wind for the industry. 


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