Illusion of insurer competition
12 Feb 2018
A proliferation of brands from a few providers is camouflaging a high insurance market concentration in Australia, according to a Productivity Commission draft report.
The four largest insurers – IAG, Suncorp, QBE and Allianz, have more than 30 brands between them, the commission says. In pet cover, identified as one of the weakest areas for competition, Hollard underwrites 20 of the 22 products available.
“The use of branding does create the illusion of more competitors than there actually are,” says the report, which recommends measures to improve transparency.
The commission says the section of a brand’s website that shows which insurer underwrites the product should include a list of other same-segment brands underwritten by that insurer. Insurers should also give a brands list to the Australian Securities and Investments Commission to publish.
The Productivity Commission also recommends showing previous-year premiums on renewal notices, along with percentage changes.
“The annual renewal point for insurance should act as a trigger point for reconsidering insurance providers, yet the complexity of product offerings and an overwhelming orientation to trusted brands induces inertia,” it says.