Allianz sees opportunity in the Australian life insurance market
January 2008
The Allianz Group has long been active in the Australian insurance market and has established itself as one of the country’s largest general insurers and a leading private workers’ compensation insurer.
The move into life insurance signifies the Group’s strong commitment to the Australian market and to providing consumers with a full suite of quality insurance products.
“We identified what we saw as a gap in the life insurance market between the products offered by investment advisors and the products available direct to market,” says Jonathan Poole, Chief Executive Officer of Allianz Australia Life Insurance.
“Third parties such as financial advisors and brokers were offering highly complex, comprehensive levels of cover that primarily catered to high net worth or affluent individuals.
“Conversely, those products offered direct to market primarily provided basic cover with low maximum sums insured and blanket exclusions for pre-existing medical conditions. They catered to lower income earners.”
Allianz saw this as an opening in the market for an insurer to provide a comprehensive policy with a reasonable maximum sum insured direct to consumers. It was an opening they decided take.
A great opportunity
“We saw this as a great opportunity, particularly when you consider this market gap in conjunction with Australia’s chronic under-insurance problem,” comments Mr Poole.
“We know that six out of ten people with dependent children simply do not have enough life insurance to look after their families if something happened to them.
“We also know that superannuation is only providing people with 20 per cent of the life insurance they need.”
In order to offer life insurance in Australia, Allianz needed a life insurance license as the general insurance license the firm held did not allow it to sell life insurance. So, in June 2006, Allianz obtained an Australian Life Insurance Licence from APRA and commenced operations.
In 2007, it expanded its product offerings, launching Allianz Life Plan in September.
Allianz Life Plan is an online product designed to make life insurance less complex and more affordable for Australians. It is the only direct online/phone life product with real time underwriting and high and comprehensive levels of cover offered by the Allianz Group worldwide. It is also unique within the Australian market.
A number of benefits
This product has enabled Australians to access a number of benefits for the first time including:
- High sums insured (up to $1.25 million for life cover) without seeing a financial adviser
- Online critical illness cover
- Online permanently unable to work cover
- Fully underwritten cover available on-the-spot over the internet or the phone
- Immediately issued policy documents emailed or made available via download.
“We saw this as a great opportunity, particularly when you consider this market gap in conjunction with Australia’s chronic underinsurance problem,” says Mr Poole.
“What we’ve done is make it possible for people to get the life cover they need in 12 minutes and at prices 20 to 30 per cent less than they are paying elsewhere,” he adds.
“What most people don’t know is that when you buy insurance from an adviser up to all of your first year’s premium can go to the adviser in commission and trailing commissions can also continue to be paid in subsequent years.”
Lower cost structure
“When researching the life insurance sector we also made the interesting observation that the lower cost structure associated with direct product provision did not necessarily mean that direct products were less expensive than products sold by the same company through its adviser network, even with the addition of adviser commissions,” Mr Poole explains.
“In some instances the pricing of these products was actually higher than those offered by financial advisers because those companies did not want to upset their adviser relationships by undercutting them and selling life insurance direct to customers.
“As such, we’ve been able to offer a product that is lower in price than both existing direct and adviser offerings.”
A wholly owned subsidiary of the worldwide Allianz Group, Allianz Australia has approximately 3000 staff. In 2006, the company achieved a gross written premium exceeding AU$2.4 billion and had investment assets of approximately AU$5.5 billion.
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