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Switching barriers in the health care and energy markets

Many consumers believe that switching providers is a lot of hassle, and that the benefits are too low. That is why a substantial share of consumers has never switched. If consumers do not switch, current providers see no need to do their best, and new providers get fewer opportunities.

ACM’s role

ACM wishes to take away any switching barrier (actual and perceived) that consumers face in order to stimulate them to look for the best offer, particularly in markets where competition could still use a little boost such as in the health insurance and energy markets.

Results of the online consultation

For six weeks, ACM put thirteen provocative statements and questions online. The goal was to gain more insight in the most important switching problems, possible solutions, the role of price comparison websites, and collectives and other sectors with switching barriers. Most comments came from consumers.

Clear prices, clear bills

Many respondents say they find offers, prices, contracts, and energy bills to be unclear. The responses to this statement are in line with previous consumer surveys conducted by ACM. In ACM’s opinion, the last, real switching barrier to be taken away are energy prices that are hard to understand and difficult to compare. ACM wants providers to be much clearer. ACM will consult with the energy sector, and work out a solution to this problem, one that will be a truly lasting solution for consumers. Energy products will then be easy to understand and easy to compare, while no longer acting as a switching barrier.

The role of collectives in health insurances

The statement that employer-based collectives in health care form a switching barrier drew mixed reactions. Observations from respondents revealed that people are actually okay with such collectives if they believe they have a good deal, and that the discount is, in fact, quite generous. Participation in a collective insurance plan may be associated with a feeling or even obligation that customers are not allowed to switch health insurers on their own. Whether such is indeed the case could not be concluded from this consultation. A considerable group of consumers has an insurance through such collectives. That is why ACM will examine the role of employer-based collectives in greater detail: are individuals well able to compare their collective health insurance policies with other policies?

The role of price comparison websites

The statement ‘It is a good thing there are price comparison websites to help you when switching’ attracted few comments. This is remarkable, because surveys in the energy markets tell us that price comparison websites are an important source of information when switching, and that they are used as switching channel. In the launch meeting, the critical role of price comparison websites in the switching process was discussed. The trustworthiness of these websites was an important point of discussion. ACM wishes to involve price comparison websites more actively in the elimination of switching barriers.

Other sectors

The only other sector that was mentioned in response to the statement was the business telephony market. Long-term contracts, automatic renewals, product bundling, and difficulties (real or perceived) when switching were some of the barriers that were mentioned, whereas information and streamlining the switching processes were named as solutions. With regard to the latter, it should be noted that various developments are taking place. The Dutch House of Representatives passed a motion to afford small-business consumers of internet and telephony contracts the same legal protection as consumers have. The Dutch Ministry of Economic Affairs (EZ) is currently preparing a bill to that end. At the request of EZ, the industry itself is working on a switching service for business consumers, which is done by the switching-barriers taskforce, which is associated with FIST, the Forum for Interconnection and Special Access. This takes place based on self-regulation. ACM is an observer in these technical discussions. In addition, ACM already enforces compliance with the rights and obligations of consumers and providers when adjusting contracts. As soon as the results of the abovementioned processes have been announced or if there are indications that more attention is needed for switching barriers in the telecommunications industry, further action will be considered.

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