When set-and-forget convenience starts costing you

ASIC has recently raised concerns that many consumers do not understand why their car insurance premiums are increasing and often accept renewal pricing without actively reviewing the reasons for the change.

While the regulator's review focused on motor vehicle insurance, the underlying behavioural issue has broader relevance for advisers: many clients operate a "set and forget" approach to recurring financial commitments and may not regularly review whether those commitments still represent value or meet their current needs.

ASIC's review found that many consumers:

• remain with the same insurer year after year;

• do not actively compare alternatives;

• focus primarily on the final premium amount; and

• often receive limited explanations for premium increases.

As a result, consumers may not fully understand why costs have changed or whether their existing arrangements continue to be appropriate.

A broader set-and-forget issue

Although the ASIC review relates to car insurance, similar patterns can arise with a range of recurring household expenses, including:

• utilities;

• internet and mobile phone plans;
• streaming services;
• memberships and subscriptions; and
• other automatically renewing arrangements.

Because price increases are often incremental rather than dramatic, they can go unnoticed for extended periods.

Useful questions for clients

The article presents an opportunity to encourage clients to review recurring financial commitments periodically, rather than focusing solely on the renewal price.

Questions clients may wish to consider include:

• Is this product or service still needed?

• Does it still suit current circumstances?
• Have the features or benefits changed?
• Do I understand why the price has increased?
• Is the arrangement still providing value?

Importantly, the objective is not necessarily to switch providers. In many cases, the review may simply confirm that the existing arrangement remains appropriate.

More than a cost-saving exercise

A recurring-expense review can also support broader financial awareness.

Many clients have multiple direct debits and annual renewals operating in the background. Reviewing these arrangements can help identify changing spending patterns, improve understanding of household cash flow and provide a clearer picture of overall financial commitments.

For advisers, this may be a useful conversation starter when discussing budgeting, cash-flow management or broader financial goals with clients.

A useful annual habit

Rather than reviewing commitments only when a problem arises, clients may benefit from incorporating a simple annual check into their routine.

This might include:

• reading renewal notices carefully;

• reviewing recurring direct debits;
• checking whether major commitments still align with current circumstances; and
• keeping records that allow year-to-year comparisons.

For many clients, the value of the exercise lies not only in identifying possible savings, but in maintaining a clearer understanding of their financial position and spending commitments.

Source: ASIC Media Release: Consumers left in the dark about rising car insurance premiums, ASIC warns