Car Insurance Comparison – Home, Life, Business & Travel Insurance Quotes

A NEW PLAYER

Australia Post has become the latest player in the Australian insurance market. They started offering their customers car insurance as of 1^st September. The move has surprised many, but clearly shows that they are not prepared to limit themselves to product lines based on their name.

Australian swimmer and Olympic gold medallist Giaan Rooney will continue her relationship with Australia Post, although now as the face of the car insurance product line. Another partner is A&G (Auto & General) Insurance Services, who will be underwriting Australia Post’s customer’s policies. A&G Insurance Services are owned by South African giant, Budget Insurance, and will partner with Australia Post on a revenue sharing basis.

Australia Post has three car insurance products planned – comprehensive, third party fire & theft, and third party property. They plan to market the products through their extensive branch network, which now consists of close to 5,000 branches, with the final sales and services will be via telephone and internet. For this, Australia Post has copied the model of a successful venture into the insurance market made by Royal Mail in Britain.

Australia Post’s head of financial services, Andrew Wiseman, said that it was a natural fit for Australia Post to move into offering additional financial services, considering that they already handle tens of billions of dollars in payments and money transfers every year. But he stopped short of declaring it would be one of the cheaper insurance options in the market, instead choosing to call their car insurance “competitively priced” and “affordable”.

NOT THE ONLY ONE

In what can only be described as a massive industry shake-up, Australia Post is just one of a number of businesses looking to make their move into the Australian insurance market. The insurance market is estimated to be worth between $25 billion and $30 billion dollars a year, and its limited number of competitors means that there is plenty of cake to share around.

Richard Branson’s famous Virgin group of companies have already got the jump on Australia Post, with Virgin Insurance having launched an online service. The move was based on estimates that 1.2 million motorists a year looked for a better insurance deal, for which they initially plan to offer car insurance and then move into other areas. Owners of an impressive website, South African owned Real Insurance are another company to make the move into the car insurance market recently.

Woolworths also has plans to join the market, following in the footsteps of their main supermarket rival, Coles. Coles will be trialling offering customers home and contents cover along with car insurance in 29 of their Tasmanian supermarkets and service stations. Like Australia Post, a copy of overseas business models will be used, with Coles looking for a successful result similar to what Tesco achieved in Britain. If the six month trial goes to plan in Tasmania, Coles will launch a national rollout shortly after.

MOVE OVER BIG BOYS

The Australian insurance market is heavily dominated by a couple of big players. Insurance Australia Group, with its brands NRMA, SGIO, SGIC and State Insurance, are one of the two big guns in insurance. The other is Suncorp, who own GIO, AAMI and Vero, as well as niche brands Australian Pensioners Insurance Agency, Shannons and Just Car.

Insurance Australia Group, Suncorp and another big player, Allianz, occupy almost three quarters of the overall insurance market in Australia. But for car insurance, the big two have an even greater share, dominated their competitors and having an estimated 75% market share.

In fact, the twelve biggest car insurance brands are owned and operated by Insurance Australia Group and Suncorp. It is statistics like these have fuelled the desires of the new entrants into the car insurance market. The car insurance market is worth $5.5 billion annually, meaning that making even a small dent into the big two’s market share could return a handsome profit.

INTO THE FUTURE

Australia Post don’t intend to stick solely to car insurance, with plans already in place for expansion into the travel insurance and home and contents insurance sectors later this year. They have also stated that their ever-expanding business model will not stop with insurance, prompting speculation of a move into the banking industry.

If they were to move into the banking industry, mortgages and deposit taking are considered the products they would introduce. But for these, a banking licence would be required, and this is a process that would normally take at least six months. So far, the Australian Prudential Regulation Authority has been unwilling to comment on whether Australia Post has already applied for a licence.

Australia Post’s Andrew Wiseman stopped short of denying the future possibility and instead chose to state that there were no such current plans on the table. This can be translated into meaning that they have discussed it and there are plans to examine the feasibility of a move in the near future. A move by a postal company into banking would not be unique, with our close neighbours New Zealand already experiencing the move when Kiwibank was launched by New Zealand Post.

WILL IT WORK?

Ultimately, people are wondering whether Australia Post’s move into car insurance will be a successful one. Andrew Wiseman is quick to point out the success of Royal Mail’s move in Britain. It is estimated that one in every 50 cars and one in every 200 homes are now covered by ‘postie’ insurance.

In fact, many postal agencies across the world have made a successful expansion into insurance, with organisations from countries such as Singapore, Italy, France, Germany and Japan enjoying positive results. Andrew Wiseman notes that the success of the model overseas gives them real confidence.

They should also gain further confidence from the fact that they are partnering with A&G Insurance, who have become known for specialising in partnerships. Plus, when you factor in their extensive branch network, many people are crying that they may have an unfair advantage in the insurance market due their large distribution network.

The branch network is larger than the combined branch networks of the four major banks. It is also responsible for processing more than 90% of Australian passports and handles 117 million transactions each year worth around $83 billion. With their huge existing customer base, they have the power to be successful in any form of product distribution and will undoubtedly give the insurance market a real shake-up.

It is the opinion of many that moves into financial markets have been forced upon Australia Post, as their traditional line of business has been deteriorating due to the advance of technologies such as e-mail. Since they are entering an untried market, they are not making any predictions of success at this stage. But given that they have a great platform to launch from; Australia Post has surely made the right move into the car insurance market. It should also be good from a consumer point of view, as the increased competition should translate into cheaper and better car insurance.