Bank Tied Insurance

The clock is ticking and in 3 years, it's time up for the banks as we know it. Westpac can merge their retail branches of St George and Westpac into one to dominate the retail branch outlet network in Australia. Every shopping centre and strip shops will have easy access to a bank that offers it all, including on week ends!

Having visited many St George branches, it's clear the level of comfort and lack of over crowding must change. In a world of maximising profit to the boundary of customer dissatisfaction, 3 years on and I expect to see many Westpac passbooks in my St George branch, so it'll be time to stand in line. It's when we get to the counter that the might of what's to come will really tell. Not only will Australia now have a bank that has an enviable savings and loans offering/portfolio, but most likely it will have one of the best Insurance offerings around, and banks love selling their insurance. If you hadn't noticed, Westpac and St George don't have a major insurance branding with a fully featured product offering on their book yet. This may be just about to change though.

AIG Australia is struggling with its big brother in the United States of America who is unjustifiably shaming its local name and causing its current distribution channels to contract. At the same time AIG have just released a market offering on its personal insurance lines that dwarfs in concept and is bound to shake up, the rest of the market. So AIG in Australia needs a major distribution portal. Can you hear the wedding bells?

Buying personal insurance at a bank can be risky; yes it's convenient, but risky. Insurance is about claiming your money when it all goes wrong and that's when many people may rue their decision for convenience over diligence. How would you feel, when you are struck down with sickness or accident, facing financial ruin of the family and long term poverty, to find your bank insurer doesn't cover that incident you have, yet another insurer would happily pay, if only you had their policy?

If the banks acted like the insurance broking market and offered, not one, not three, but all (that's 14+) of the available personal insurance companies to you, you'd expect to be able to be guided to making an informed and valuable choice for protecting yourself. Unfortunately today that opportunity does not exist with the Banks and if AIG wed Westpac/St George it's not likely to happen.

The clock is ticking and in three years or less I'm looking forward to hearing those words on the lips on my teller, "can we help you with life insurance, it's by AIG" at which stage I'll ask "and what other insurers companies do you offer?"

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Published on November 11-th, 2008 in Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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