Suncorp stays solo in insurance battle

September 7, 2009

SUNCORP will go it alone rather than partnering either Woolworths or Coles as part of its plan to defend its 30 per cent of the insurance market against a much-mooted and large-scale entry by the two leading retailers.

The country's biggest personal insurer already provides "white label" motor, home and travel cover for big companies such as AMP, Westpac and BankWest but sees little benefit in giving a leg up to the shopping giants.

Coles is already trialling basic insurance products in a pilot project while Woolworths is expected to enter the market as part of a wider push into financial services that has so far included a credit card and a loyalty reward card points scheme.

Suncorp, whose brands include AAMI and GIO, and its biggest rival, Insurance Australia Group, owner of NRMA Insurance, are facing a new threat to their mass market business from Australia Post and Virgin following their decisions to offer car insurance.

Australia Post has teamed up with A&G Insurance to provide vehicle cover through its retail network of 4450 outlets and intends to launch a home and contents policy plus travel insurance over the coming year.

Virgin Insurance has also just launched an online service, primarily focused on Sydney, Melbourne and Brisbane, and hopes to leverage off the group's existing profile in Australia.

But the greater dangers are posed by Coles and Woolworths through a combination of their buying power, store networks, huge marketing budgets and loyal customer bases.

One way to combat those threats, as well as shoring up a source of revenue, would be for Suncorp to offer to provide the main parts of the retailers' insurance products: underwriting cover, management and payment of claims and back-office administration.

But while not ruling out the possibility, Bernadette Inglis, Suncorp's head of personal lines insurance division, told BusinessDay the group was a retailer in its chosen market as much as Woolworths and Coles were in theirs.

"We are not closed to these alternatives but we are a retailer and a consumer retailer at that, and see our business continuing as a direct relationship with our customers," she said.

While appreciating the threat posed by Australia Post and the two retailers, Ms Inglis said the domestic industry was different from overseas markets.

About 80 per cent of Australian customers dealt directly with their insurance companies rather than through brokers.

Source: http://business.brisbanetimes.com.au