Allianz will take ownership of Territory Insurance Office (TIO) under a deal worth $424 million, but customers and staff can expect continuity under the new model, according to Northern Territory Chief Minister Adam Giles.
“The TIO name remains, branches stay open, policies stay the same, flood and storm surge cover continues and staff keep their jobs,” said Mr Giles, announcing the deal yesterday.
“TIO will continue in its current form but now has the backing of the largest insurer in the world.”
Niran Peiris, Managing Director of Allianz Australia, said the organisation understood how important TIO was to Territorians.
“Allianz is honoured to be chosen to be entrusted with the future of such an icon of the Territory community,” Mr Peiris said.
“Allianz will maintain the brand and TIO will continue to offer products featuring flood, storm surge and cyclone cover.
“We want to preserve and promote TIO’s brand and maintain the coverage Territorians rely on. We are here to grow TIO, not change it.”
Under the new arrangements, Allianz will take ownership of TIO insurance, and the banking services will transition to People’s Choice Credit Union.
Subject to relevant legislation passing through Parliament and ACCC approval, ownership of TIO’s general insurance business will transfer to Allianz, and Allianz will start servicing the Government Motor Accidents Compensation scheme on 2 January 2015.
Mr Giles said the Government had the option to sell the insurance, banking and Motor Accidents Compensation (MAC) arms of the TIO business, with an estimated total value of $609 million.
But he said the MAC Scheme will remain in government ownership because selling that scheme was “not in the interests of Territorians.”
That scheme will be retained by the Government, but will be managed by Allianz on its behalf for the next 10 years.
TIO is the market leader in general insurance in the Territory, with GWP of around $130 million.
Mr Giles said it was crucial the new owner looked after the TIO brand, maintained the services Territorians rely upon, and looked after TIO’s staff.
He said, “Allianz have committed to all this, ensuring that TIO has a long future in the Territory and that Territorians continue to have access to the insurance cover they need.”
The Chief Minister also stressed that the decision to sell TIO hadn’t been taken lightly, but the Government believes it represents the best outcome for taxpayers, reducing their exposure to risk and freeing up $424 million for the development of Northern Australia.
“The funds raised through this change of ownership enable us to invest in the infrastructure we need to unlock the full potential of the Northern Territory, creating jobs and opportunity for our children.” Mr Giles explained. “They also allow us to do important community flood mitigation work.”
In terms of the division of sale proceeds, $215 million has been earmarked for a long-term infrastructure development fund, and the remainder will be made available for more immediate community infrastructure projects.