The AA are giving their customers advance notice that there is a possibility of a price rise due to the Government increasing insurance policy tax rates.
According to reports, tax rates on insurance have doubled within two years! AA have said that they have so far managed to carry the extra costs, but now they feel as if they are going to have to raise their prices to compensate.
They are hoping that enhancing the quality of their services will justify the price increase.
They have already invested in a range of technologies such as a breakdown app which is being used by 22% of their customers.
The AA appears to be getting back on their feet after a slow season which saw a decline in membership. They have recently announced a 0.4% increase in paid membership.
The group signed up a significant number of new customers, which amounted to a 19% increase. They also managed to retain 82% of their existing customers.
Over the months running up to January 31, the AA witnessed a 5% increase in the amount of breakdown call outs. All of which assisted in reversing the decline.
The company has stated: “Although this has not been good for short term costs, it highlights the need for our services and improves the chances of customers feeling confident enough to renew their membership.”
They also mentioned that hiring an in-house underwriter has significantly improved their sales, gaining motor insurance policies of 115,000 within the first year. This was a pleasing figure and they expect it to increase over time regardless of the potential price increases.