By Ruth Liew, SMH
Companies such as Google and Amazon may pose some of the biggest threats to Australian insurers, as consumers increasingly trust technology behemoths to provide services such as insurance and finance.
Overseas reports have singled out companies such as search giant Google and e-commerce group Amazon as players mulling entering the insurance sector. These, along with other non-traditional insurance groups such as retailers tapping the insurance game, could spell the biggest threats to companies such as Suncorp Group and Insurance Australia Group’s market share in Australia, according to Accenture.
Ravi Malhotra, managing director of Accenture’s business strategy practice also warned that a boom in new insurance business models such as crowd funding may add further pressure.
“The combination of new business models, some of which may break through, along with companies looking for adjacency in the insurance market [could see Australian insurers] come under pressure,” Mr Malhotra, who leads Accenture’s insurance division in Australia, said.
“Some of the premiums will be directed to alternatives, and the profitability associated with doing the business [such as writing traditional home and motor insurance] will come under pressure.”
In May, retailer Wal-Mart entered the auto insurance market, while more recently Swedish furniture group IKEA became one of the latest retailers to push into the insurance market. IKEA started selling pregnancy and child insurance in October, according to overseas reports.
Research from Accenture showed that around 50 per cent of Australians were motivated by price when shopping around for motor insurance. Nearly 70 per cent of consumers around the globe would also consider buying insurance products from companies such as Google and Amazon, according to a separate survey of over 6,000 people by Accenture.
Australians are increasingly comfortable to use technology to secure policies as they hunt for cheaper offerings.
“I believe they [Australian insurers] will be worse off if they leave these trends to unfold, without actively participating in the market tests,” Mr Malhotra added.
Around 64 per cent of Australians use the Internet to learn about companies or products, and more than 50 per cent of motor insurance customers research quotes online before committing to a policy, according to an Accenture survey of over 3,500 Australians.
Despite aggressive competition from challenger brands including online offerings, insurers such as Suncorp and IAG still control more than 60 per cent of motor and home policies in Australia.
Retailers including Wesfarmers and Woolworths have attempted to wade into the insurance sector by launching their own line of products, with varying degrees of success. IAG however swallowed Wesfarmers’ insurance underwriting unit in a $1.85 billion deal last year, effectively wiping out one of the biggest threats to its business.
A spokesman from IAG said the company operated in a “really competitive environment” and it was “constantly looking at the evolving insurance market place in Australia and internationally”.
Suncorp declined to comment.