Focus on the client

Retailers enter the game intermediaries beware

Last week we ran a story about Woolworths and their entry into the insurance market.

Woolworths explained how and why they plan to do it. At this stage it is mainly a call centre operation with a dedicated Woolworths Insurance call centre being managed by a dedicated team from Auto & General supporting Woolworths Insurance.

Woolworth's benefits commercially through their partnership with Auto & General.

According to one source Woolworths got out of the unit trust game shortly after the introduction of FAIS. Interestingly they are currently licensed for Long term Insurance category B on License # 15289.

On the other hand a reader at one of the compliance operations provided us with some information about the effect the entry of a retailer had on their market.

The year was 2004, and research going back to 1998 showed that the market share of tied agents compared to independents, where the tied agents dropped from some 44% to 30%, independents increased their market share from 50% to about 62%.

More interesting supermarkets (specifically Sainsbury) and the like increased their share from virtually zero to 10% making them a competitor that can be ignored at the competitor's peril.

Editor's thoughts:
The size of the threat from the retail sector should not be underestimated. Intermediaries may not be able to counter the danger but perhaps it's time to remain focused on the business and not the threat.