Cba Declares Insurance War
Sun Herald
Sunday August 8, 1999
THE Commonwealth Bank has started an insurance war by offering "honeymoon rates" for a year on home and contents insurance.
Like cut-price home loans, the strategy is to win market share from the NRMA and GIO, which between them hold more than half the market.
Sydney's hail storm revealed that many Australians were underinsured by 30 per cent, with poorer and older areas being up to 60pc underinsured.
Financial advisers have underplayed this, according to Lyndell Fraser of Commonwealth Insurance. "They have been good on superannuation and long-term financial planning, but I know that, if my home burnt down without enough insurance, that would set me back a long way for a long time," she said.
When you take into account the nearly 15pc of homes uninsured, the rest of the market is crowded with many other insurers and brokers. The Commonwealth has about 5pc, with much more home insurance than contents.
Some customers turn to brokers after a bad experience with direct insurers because brokers can explain the fine print, tailor a policy and help with claims, according to Doron Grossman of Insurance Brokers Network Australia (IBNA).
Its policies are competitive, but attract an extra $60 brokers' fee which buys a middleman in case of a claim.
"If price is not the only issue, brokers can help people get the best insurance for them," he said.
"But the NRMA and GIO do not cover a lot of fiddly things that most people claim on."
"We can organise accidental damage which covers anything you break in your home. The NRMA doesn't."
The GIO's Ray Scanlan said research showed most people were not interested in the details of insurance.
"The business is very price competitive and most people buy on price," he said.
"Most people do not do a comparison of coverage although they are basically the same, covering fire, storm, earthquake and burglary."
There are a variety of other issues covered, such as the fusion of electric motors and food spillage.
Flood damage is coming in after the Wollongong experience, with only Sun Alliance offering it.
Many, but not all, insurers were shamed into covering the Wollongong flood damage.
Donnelly Insurance Brokers says the Rolls Royces of policies cover accidental damage, which cover everything unless it is specifically excluded.
The usual policies cover defined events - those specifically listed - and are the Commodore models.
WHAT WILL YOU PAY
Suburb $250,000 $50,000
building replacement
CAMPERDOWN
GIO $328 $279
NRMA $386 $322
IBNA $399 $554
Commonwealth $353 ($298*) $366
CHATSWOOD
GIO $328 $223
NRMA $406 $261
IBNA $399 $343
Commonwealth $353 ($298*) $250 ($228*)
PENRITH
GIO $328 $208
NRMA $386 $248
IBNA $399 $421
Commonwealth $385 ($298*) $250 ($228*)
LIVERPOOL
GIO $328 $329
NRMA $406 $313
IBNA $399 $344
Commonwealth $385 ($298*) $314 ($286*)
SUTHERLAND
GIO $328 $208
NRMA $406 $204
IBNA $399 $314
Commonwealth $368 ($298*) $250 ($228*)
IBNA adds $60 broker fee, all have further
discounts for combined policies. (*honeymoon rates)
© 1999 Sun Herald