Supermarkets Coles and Woolworths shake up insurance war

SOPHIE ELSWORTH
January 10, 2014
News Limited Network
CONSUMERS have avoided hefty insurance premium rises and benefited from the nation’s supermarket giants expanding into the industry and increasing competition.
Insurance policy costs have fallen in some states in the past few years as Coles and Woolworths expand their offerings in the market – an area that has long been dominated by two players, Insurance Australia Group and Suncorp.
Financial comparison website Mozo’s spokeswoman, Kirsty Lamont, said since the supermarket giants and smaller challenger brands entered the market in recent years competition had hotted up.
“The entry of Coles and Woolworths into the insurance market is finally creating real competition in an industry that has been dominated by just two players,” she said.
“Between them they control 90 per cent of the market and most of the major insurance brands.”
Research by financial services firm Canstar found in some states the cost of contents insurance policies dropped.
In Victoria the average annual $150,000 contents policy fell from an average of $687 in 2010 to $648 in 2013.
In NSW the same policy cost fell from $856 in 2010 to $820 in 2013.
The national average premium cost remained relatively stable from $641 in 2010 to $680 in 2013.
Average annual car insurance policy costs increased by about 7 per cent since 2011 from about $862 to $931 and Canstar spokeswoman Justine Davies said increased competition would always benefit consumers.
“The entry of new players into the market increases the competition for customers and this can also affect premiums, potentially keeping them lower than they might otherwise be,” she said.
Coles Insurance, issued by Wesfarmers General Insurance, took a big bite into the car and home insurance pie and lured hundreds of thousands of customers.
“We now have nearly 270,000 policies which has grown nearly 10-fold in the last two and a half years,” a Coles spokeswoman said.
“Our customers love affordable insurance offering with comprehensive car insurance our most popular product.”
A Woolworths spokeswoman said they had expanded their range of policy types on offer to help boost market share.
“We have seen a great response from customers since launching our pet and life insurance in 2011 and car home and travel insurance in 2012,” she said.
“Last year we set out to double the number of policies we sell in this financial year and we are on track to do this.”