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Sunday, 22 February 2015

AA roadside breakdown: Why can't you give sensible personalised renewal quotes?

[Short link to this article if you need it - - or retweet me]

I'm a long standing member of AA ... Before anyone says it, I don't have an alcohol problem - I'm referring to the Automobile Association which provides vehicle breakdown cover in the UK. With most insurance policies for standard vehicle insurance and the like you'll be given a "reasonable" renewal quote based on your history and personal circumstances. But it seems the AA are completely incapable of doing the same. Every year they send me a standard renewal quote which is vastly higher than the prices on their web site, and every year I call them up and they drop it by about a third - often matching (or getting very close to) the prices on the web site. I got fed up and contacted the president of the AA:

Thanks Mr.President - not actually acknowledging any problem, just telling me to call up again and sort it out. But you have to wonder why I would choose to do that when I could just call up your competitor and get a better price. Don't get me wrong - I'm very happy with the AA service, it's just the renewals process I have an issue with. This yeah I renewed my motorcycle insurance and was sorely tempted to take out the insurer's optional breakdown cover and then sign up to my bank's "extra" account which included breakdown cover for the car. But I'm going to write this blog post and see if they'll show any signs of changing it. "Big Data" is a big buzzword in the computing industry just now in terms of analysing vast quantities of data, but insurance companies have been doing this sort of thing for a long time to set premiums. It's inexcusable that AA's renewal prices are vastly higher than the ones on their web site - and I also claim that what's on their website is blatantly misleading ...

To give an example, at the time of writing this blog the basic level of cover on as I write this is listed as £74.99 with a special £10 discount bringing it to £64.99 as per the image on the right. So what is the £10 discount for? Here's the small print:

* The £10 discount is available to new customers purchasing vehicle cover and national recovery using an annual payment method.

So the £10 discount appears to be for new customers, and therefore you'd naturally assume that the standard price for existing customers renewing would be £74.99. That's the level of cover I have. Last year the renewal came through at almost double that. So what does the £74.99 apply to if "new customers" are only getting a £10 discount off that? If anyone manages to find AA's "real" (not introductory) prices listed anywhere on their site then you're doing better than I managed when I alst looked.

It's made worse by the fact that the AA don't seem to have an option not to auto-renew each year (at least they are notify you before renewal date, avoiding nonsense list this  from 2012). So by default you'll suddenly get completely screwed by a massive price hike from what you're expecting (The send you a letter, but unless you verify it with last year, or the web prices, you might miss it) This is what happened last year for me:
So now we've covered the background, here's my standard "full disclosure" conversation with the AA (Note that this conversation was about a year ago so the offers mentioned are different from what's currently available)

SXA> Hi - I've been an AA member since I was on my father's membership, other than a 
SXA> short period when it lapsed for a couple of months (I initially had a card that 
SXA> showed my "member since" date as 1966). Over the last few years it seems my
SXA> renewal has always come in at a price significantly higher than the old price, 
SXA> and since you're keeping my details on file, you will auto-renew at the above price.
SXA> For the last few years or so I've called you each year and you've knocked it down
SXA> to a level comparable with the price on your web site. Each year I am told that it's 
SXA> because that's a "new policyholder" introductory discount. There are several issues 
SXA> with this:
SXA> 1) Despite you're auto-renewal policy I don't consider AA breakdown do be a 
SXA> subscription service (in the same way I don't with my car insurance policy) unlike 
SXA> something like music streaming or a TV subscription would be. I'm paying for one 
SXA> year of service. For this reason any "introductory discount" (as your assistants 
SXA> point out, that's what's on your web site) seems less relevant. And even though 
SXA> you've dropped the price for me to a comparable level, you still have scope for an 
SXA> introductory bonus for true new customers of the Amazon vouchers (I don't have such 
SXA> a problem with that)
SXA> 2) Last year I paid £85. This year my renewal came in at £145. Even if I was a new 
SXA> customer last year an increase of 70% is something that most people would choke at. 
SXA> If it wasn't so extreme then people would be more likely to accept it.
SXA> 3) If I just "trusted" your renewal quote then you are actively encouraging loyal 
SXA> customers such as myself to look elsewhere. In fact to avoid calling your call 
SXA> centre every year to beat the price back down it'd be less hassle for me to just 
SXA> toggle between the AA and RAC each year. That's nonsensical from a business point of 
SXA> view from your company. (For the record, a big chunk of the reason I don't do this 
SXA> was because I also need motorcycle cover which several of the providers don't have - 
SXA> but the RAC includes it as you do)
SXA> 4) I haven't given my membership number in this email but your records would show 
SXA> that I've made this call for several consecutive years. Surely given that you have a 
SXA> record of me doing this, it would be preferable from a "Don't annoy the customer" 
SXA> perspective to offer a more sensible renewal price for people who you know are not 
SXA> going to accept the default renewal price. Unless of course you don't care about 
SXA> customer loyalty. I understand some people will just accept the renewal, and that's 
SXA> their own fault that they don't know better (as is the case for many financial 
SXA> services) But as someone who you know won't put up with it, you're not encouraging 
SXA> loyalty.
SXA> I'm interested to see a considered response from you on this - even better if you're 
SXA> able to forward to Edmund King as a "case study". I hope you can use this 
SXA> information to improve your services.

AA> Dear Mr Addison,
AA> Thank you for taking the time to email The AA Social Media Team.
AA> This is something we would like to look into for you.
AA> I have liaised with the relevant department and have passed your details over for 
AA> investigation.
AA> You will be contacted as soon as possible.
AA> Kind Regards
AA> [name removed for this blog]
AA> The AA Social Media Team

22 days later I received a reply

AA> To: Mr S Addison
AA> From: The Automobile Association
AA> Dear Mr Addison
AA> Thank you for contacting us about your AA membership renewal. I was sorry to learn 
AA> that you are unhappy that you have to call each year to obtain a discount for your 
AA> renewal.
AA> The AA, like many companies, operates a standard pricing structure for existing 
AA> members. We are unable to offer automatic and continuous discounts so we send the 
AA> standard quote for renewing at the level of cover held and give the member the 
AA> opportunity to contact us if they are unhappy.
AA> It is difficult to personally price cover for over 4.5 million members so it is only 
AA> when we are contacted that we can look at each membership on an individual basis. We 
AA> review the cover held, service usage and membership tenure in order to see if a 
AA> discount is available.
AA> As a long standing member I can see a discount has been honoured again for you this 
AA> year as it has in the past. I hope you will be happy with the new price that has been 
AA> arranged.
AA> In closing, I would like to thank you for taking the trouble to make us aware of your 
AA> feelings. It is through valuable feedback, such as yours, that we are able to learn 
AA> and improve the service we provide. Finally, I would like to apologise again for 
AA> failing to meet your expectations.

So they claim to have a "standard pricing structure" (as per my opening paragraphs, I don't see where this is published - it certainly isn't made clear that it's way above the prices on their front page) and their assertion that "it is difficult to personally quote for 4.5 million members" is just crazy. I'm not expecting an individual quote like I'd get for my main vehicle insurance cover - there aren't that many cases for breakdown cover. So I went back to them:
SXA> Ref: "It is difficult to personally price cover for over 4.5 million members so it 
SXA> is only when we are contacted that we can look at each membership on an individual 
SXA> basis."
SXA> Are you honestly saying your systems don't have algorithms that can figure that out 
SXA> in far less time than it takes someone on the phone to look at a screen and make an 
SXA> assessment? I work in the computer industry and the concept of that not being an 
SXA> obvious thing to have automated is astonishing to me - it's NOT difficult to put an 
SXA> initial sensible personal discount together automatically. Even if this was only 
SXA> triggered for people like myself who you know will call every year. Also, if you 
SXA> offered a sensible renewal price in the first place your customers would almost 
SXA> certainly be less likely to "haggle" on the phone to bring it down even further. The 
SXA> only reason for not automating this is the hope on your part that people won't 
SXA> bother to call.
SXA> I am happy with the new price, but I am struggling to see why I would remain with 
SXA> you next year when you force me to do this every year (especially in light of your 
SXA> odd comments on difficulty of automation). Unless of course you don't genuinely care 
SXA> about customer loyalty and satisfaction. Also, ref your "standard pricing structure 
SXA> for existing members" - where are those prices publicised - I couldn't find them on 
SXA> your web site.

At this point I received no further reply via email but did receive a letter from them:

Nonsense. Can they not afford a competent IT division, or do they just like ripping people off? Until I see evidence to the contrary I'm going with the latter.  I assume the "official complaint" mentioned in that letter is logged in there and then been chucked in the "Your call is important to us" bucket. And since they were floated on the stock market last year I'm not holding out much hope that they have an interest in anything but making more money for the shareholders. I'm happy to discuss further with the AA if they wish to talk to me to convince me otherwise. Or make a comment in the blog publicly, or to me on twitter.

EDIT 25/2/2015 : Two days after I posted this article I got a renewal notice through the mail - £138.04. Can I be bothered calling them up again, or is it time to vote with my credit card and leave them?

EDIT 3/2/2015: Adding a few random tweets from others on the subject:


On the basis of the above, I feel sorry for the poor individual who decides to take up this job  ...