By Gareth Vaughan
Kiwibank CEO Paul Brock says the state owned bank's push into life insurance will see it selling insurance to customers through its banking network that's cheaper than insurance peddled by insurance brokers.
Speaking after Kiwibank unveiled a NZ$57.9 million surge in annual profit to a record NZ$79.1 million yesterday Brock questioned whether a life insurance market driven by sales through brokers delivered the best value for customers.
"We believe we can provide an offering sold through the bank that will be best value by comparison to some of those higher cost packages available elsewhere," Brock said.
"The main thing is that we want to simplify the life insurance product offering and make it very easy to buy so that it's integrated into your discussions with us about your financial needs. Largely it's about a simplified product that's really easy to get and get hold of, and secondly that's really good value."
Kiwibank has been selling the likes of house, contents, motor vehicle and travel cover and health insurance through outsourced providers since 2002. It's now moving to an "in-group manufacturing model" for some insurance products. One of Kiwibank's conditions of registration with the Reserve Bank is that the banking group's insurance business isn't greater than 1% of its total consolidated assets. Kiwi Insurance will therefore be a sister company and subsidiary of Kiwi Group Holdings, a holding company of Kiwibank's parent New Zealand Post.
Brock said the bank had a "good insight" into what customers were currently paying for life insurance, although he wouldn't detail how much cheaper Kiwibank might be than rivals' life insurance charges.
The NZ Post/Kiwibank fledging insurance business, Kiwi Insurance Limited, has thus far launched one product being credit card repayment insurance. Brock said next would be a a term life product later this year.
"We think New Zealanders are under-insured overall," said Brock. "And given that we've got a significant customer base and now that we're 10 years old, many of them are in that younger age group coming into the mortgage age group, coming into the young family age group. We are very fired up to make sure people are well covered overall."
Brock's comments come after he told interest.co.nz in a Double Shot interview in March last year that the group was building a start up life insurance company "like we built a start-up Kiwibank." He said he expected to attract new customers just for the insurance. And in February Brock said Kiwibank was aiming to build up its life insurance business through its retail bank network.
Investment in the life insurance push was "a relatively small investment in the overall scheme of things," said Brock. "It will become quite profitable relatively soon in the journey in our view. Having said that I don't want to give a timeframe because we're still in the stages of setting the thing up and agreeing the levels of growth and business plan and all those sorts of good things."
Asked whether life insurance would be sold by existing staff in Kiwibank/NZ Post stores or new specialists would be brought in, Kiwibank said it wasn't yet in a position to provide details on sales procedures.
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