Australia Post has announced it will expand into the insurance market, offering car insurance with further plans for travel, home and contents insurance by the end of the year, including possible offerings for SMEs.
The announcement comes after postal organisations in several countries including France, New Zealand, Britain, Japan, Singapore and Ireland have introduced similar proposals. Currently, about 2% of British cars are insured by the country’s postal service.
Australia Post says it will offer “competitively priced” car insurance via a phone service and online, with the service offering a life-time guarantee on all repairs and an option for accident car hire.
The service will be set up as a joint venture with Auto and General Insurance Services, and will see it compete with larger companies such as Suncorp and QBE Insurance.
But spokesman Alex Twomey says Australia Post expects success by marketing the offering with an emphasis on its iconic brand. Currently, Australia Post handles 117 million transactions worth $83 billion each year and handles financial services transactions for 75 companies.
“We see an opportunity in the middle tier of the market for people who want to pay slightly less at a competitive price than a premium insurance company. But we are a trusted brand, we are a brand people know and have contact with, and we think that will position us very well.”
Twomey also says Australia Post is well placed to offer home, contents and travel insurance, with the service handling more than 90% of the country’s passport applications.
“We will be following up this offering with home, contents and travel insurance, and we think that we will be very well placed for that as well. All of this will be handled on a hotline, website and in our stores as well.”
He also says there may be an opportunity to introduce offerings for SMEs, but currently the services will be geared towards individuals.
“Right now this is purely a consumer-based insurance product we’re looking at, so an individual offering. But we are focusing more and more on ways we can help SMEs through out outlets, such as with business banking. So we are looking at ways we can help businesses.”
Despite the move into the $24 billion insurance industry, Australia Post still has no formal plans to enter the banking industry. Speculation has grown over the past few months the service will offer a basic banking service, but it says this is not the case.
Australia Post group manager of financial services, Andrew Wiseman, said in a statement moving into insurance was the “next logical step”.
“We know many Australians are looking to move to more competitively-priced insurance but they still want a reputable company behind their policy.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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