Competition in Australia’s
insurance industry has received a significant boost with the
announcement by retailer Woolworths that it has entered the market.
As an initial step, Woolworths, Australia’s largest supermarket
group, will be offering life insurance and pet insurance as an
addition to its financial services strategy launched in 2008 under
the Everyday Money brand.
“We intend to have a
long-term presence in the insurance sector, with the ability to
cater for all our customers’ insurance needs,” said Woolworths’
head of insurance George Hughes. “We very much view our role as
that of a market challenger to provide everyday Australians with
access to insurance products that may previously have been out of
their reach, or new types of cover that can protect against
unforeseen expenses.”
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Woolworths has the financial
muscle and reach to back its insurance market ambitions. In its
financial year to June 2011 it reported total sales of A$54.5bn
($57bn) and a net profit of A$2.124bn.
Hughes said: “Insurance is
the next growth phase of our well-established financial services
offer and will enable us to continue to bring innovative,
affordable and no-nonsense products to our customers. Our research
tells us that many everyday Australians find insurance difficult to
understand and access, to the extent that 95% of families do not
have adequate levels of life cover.”
As its initial offering in
the life insurance sector, Woolworths will launch a product
providing cover of between A$100,000 to A$1.5m to consumers aged
between 18 and 65. According to the retailer, applicants will not
be required to undergo a medical examination or blood
tests.
Partnering with Woolworths in
its new insurance venture are Swiss Re and privately owned South
African composite insurer The Hollard Group (Hollard). For life
insurance, Swiss Re will act as the underwriter and Hollard will
act as the distributor and administrator of products. For general
insurance products, Swiss Re will act as reinsurer to the
underwriter Hollard. Woolworths will be responsible for all
marketing aspects.
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By GlobalDataHollard was founded in 1980
by Robert Enthoven and is still owned by the Enthoven family. In
addition to operations in its home country, Hollard has operations
in Australia, the UK, Pakistan, India, Botswana, Namibia, Ghana and
Mozambique.
In its financial year to June 2010, Hollard reported gross
premium income of ZAR13.5bn ($1.9bn) of which life insurance
contributed ZAR4.5bn. Hollard’s net profit in 2009/2010 stood at
ZAR943.9m of which ZAR572.4m was from its life insurance
operations.
