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Tower to price check supermarket insurance sales
Staff WriterNovember 29, 2005 - 12.00am
Tower could soon distribute its life and risk insurance products through supermarket chains and mortgage brokers in a bid to effectively reach middle Australia.
Jim Minto, Tower Group managing director, said the group hoped to grow its sales by 50 per cent in the next three years by exploring new distribution channels as well as its existing networks. "There are changes to the way people buy traditional products. In the UK, 6 per cent of term life [insurance] is sold through a supermarket chain," he said. Minto, who last week announced Tower's $97.8 million NPAT for the year to September 30, 2005, acknowledged that insurance was a specialised area that required advice to explain complicated issues, but also said the onset of Financial Services Reform (FSR) was making it difficult to reach ordinary Australians. "Underinsurance is a real problem, and at the same time a lot of advisers don't want to deal with people with lower account balances. Not everybody wants a highly engineered insurance product, so we're looking at new ways to reach customers," Minto said. Tower currently has a key alliance partnership with television and telephone sales specialists, Insurance Line. It has been a significant year for the Tower Group, which spun off its trustee business and Bridges dealership under the Australian Wealth Management (AWM) banner in February. The group also sold down its 50 per cent interest in FSP Group to 10 percent, and implemented a new management structure. Tower still has a minor stake in the Mawsons dealer, which it helped to set up in 2000, but Minto suggested a tied distribution model was not the most effective long-term option for Tower, although he did not rule out possible acquisitions in this space. "Owning a dealer group doesn't make advisers sell your product, and you don't need to have a dealer group for advisers to support you. We're committed to having very good products to give advisers choice," Minto said. "If you're an adviser owned by a bank, then a company like Tower is a good partner because we're not a competitor and we don't have controlled distribution." Commenting about the group's decision to spin off AWM and sell down its stake in FSP, which owns interests in a number of dealer groups including Financial Services Partners and Vector Financial Consultants, Minto said: "We don't want to tie up huge amounts of capital in owning dealerships. Dealers don't make money and they break even if they're lucky."
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