Do you believe that more life company consolidation will have a negative impact on consumers?
- Yes (80%)
- No (18%)
- Not sure (2%)
Will fewer life companies operating in Australia translate into less competition and disadvantage customers?
Our latest poll considers the question of industry consolidation. We are seeking your opinion as to whether you believe your clients will be disadvantaged by less choice and potentially less flexibility that may result from fewer institutional players in the market.
Our question is:
Do you believe that more life company consolidation will have a negative impact on consumers?
At his company’s AGM last week, TOWER Australia’s Managing Director, Jim Minto, raised his concerns about the potential impact to consumers of fewer companies operating within the life insurance market:
“The transformation of the market to fewer, larger players creates a concern that Australians will lose choice amongst life insurance providers as well as see a loss of independent companies and innovative solutions.”
… large players with power can create reduced choice and higher prices
“We will potentially see Australians being offered higher margin products as a result. Life insurance is not a price and value sensitive consumer commodity product and large players with power can create reduced choice and higher prices,” warned Mr Minto.
Others may present an alternative case that consolidation, if managed efficiently, will lead to greater economies of scale, which could in turn have a positive impact on product pricing.
Economies of scale may also allow investment in expensive, cutting edge, customer service technologies that may not otherwise be feasible (eg the next generation of electronic underwriting and online client management services).
But advisers and dealers are at the sharp end of the life insurance/financial planning market place and know their clients best. What is your view? Will more industry consolidation lead to a positive outcome for your clients? Or do you believe your clients intetrests will best be served in their ability to choose between a broader array of life company ‘propositions’?
Have your say…
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4 Comments
It is more who is doing the consolidating that worries me?The banks are gobling up everyone and anything they can get there hands on and get away with,already the service from many of these companies has gone to the crapper,just walk into any bank and you know what i am referring to here?I rate this along side our immigration policy,let this continue unchecked at current rates and we are all in for one hell of a big time reality check,and then it will all be far to late to do a damm thing about it.
Companies like Tower, Zurich, AMP will be gobbled up by the banks. Advisers will be working for the banks who will then pay us what they like. The products will become the same, have the same price, and there’ll be less upgrading. AFA and licencees should create their own products for us to sell.
There is a certain bank owned insurer whose Trauma product is commonly 25%-30% more expensive than the more competitive insurers on the market.
I wonder which direction their pricing is likely to go in the future?
Hopefully the government won’t allow the NAB/AXA takeover. Banks only want shareholder returns, they are not worried about anything else.