Suncorp will establish a central pricing team and a central claims team for its range of personal insurance produced, including motor vehicle insurance, trying to reduce costs be better utilising technology.
While the back end of the business will be seen as a mega insurer offering a central place for pricing and claims, the core elements of individual brands will be maintained, according to a Suncorp presentation.
At a recent investor day, Suncorp chief executive Patrick Snowball said the company’s general insurance business will improve its underlying margin by at least three per cent over the next two years, delivering $235 million in annual benefits by June 2013.
He said the cost of delivering the project would be $120 million which would be absorbed within the existing cost base by cutting discretionary spending and redirecting other capital expenditure.
The implementation of a single pricing engine and claims model will be the primary driver of the personal insurance business’ contribution to the improvement in underlying general insurance margins.
Personal insurance chief executive, Mark Milliner, said the strategy was to move from a portfolio of separate businesses to a single functional model.
“One pricing system and one pricing team gives us a consistent view across the portfolio and minimises conflicts between brands, which will help lift yield on new and renewal policies,” Milliner said.
“A single claims model will reduce repair costs and times and optimise our purchasing systems but, more valuably, it will allow our brands to share knowledge and resources when and where it matters most.”
Milliner said Suncorp’s “one team, many brands” strategy in the personal insurance business maximised product differentiation and market penetration. This allowed Suncorp to target multiple customer segments simultaneously and provided it with the scale and a strategic defence against new market entrants, including online competitors.
“Importantly, we have already commenced rolling out the strategy across the business,” he said.
Snowball said Suncorp’s general insurance business would benefit from simplification of its structure and systems.
“Our insurance business holds a clear advantage over competitors because of its scale; its industry leading suite of brands; and the fact that we have end to end control of our own manufacturing, pricing and distribution channels,” he said.
“Our move to a functional model and a single view of pricing and claims will ensure the general insurance business leverages scale advantages across all of its brands and unlocks the potential in functional capability that has not been realised to date.”
Under the system, the Suncorp brands will continue to operate as under their own models.
Those brands are: AAMI, GIO, APIA and Sunbcorp Insurance for the mass market and Shannons, Deposit Power, Insure My Ride, bingle.com.au, Just Car Insurance, Vero, CIL Insurance and terri scheer.
Commenting on the merger of the operations of the Suncorp suite of insurance brands, MTA NSW chief executive James McCall said he believed the brands would continue to to operate independently and not have to move to the AAMI system of quoting, and they will all continue to have separate product disclosure statements.
“We believe firmly that competitive tendering leads to shoddy work, poor quality and often unsafe repairs,” McCall said.
He said the industry must put quality and safety before price.
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