Insurance giant dismisses deal’s impact on market share

Insurance giant dismisses deal’s impact on market share | Insurance Business

Insurance giant dismisses deal’s impact on market share
IAG has dismissed concerns it has cornered a greater section of the personal lines and SME market in New Zealand as a result of last week’s deal with Berkshire Hathaway, saying the impact is ‘minor’.

Under the terms of the 10-year ‘strategic relationship’, IAG will take on Berkshire Hathaway’s local personal and SME business lines while Berkshire Hathaway will acquire the renewal rights to IAG’s large-corporate property and liability insurance business.

IAG’s share of the New Zealand home, contents and vehicle insurance market is currently said to be 66% already, with 40% of the intermediated market in their hands too.

But in response to concerns of IAG getting a further boost to its already significant share, the company had this to say: “Competition in the relevant New Zealand markets is very strong and is not affected by IAG’s agreements with Berkshire Hathaway.

“So there has been no need for any particular approvals but we have been in touch with regulators as a courtesy.

“The impact on IAG’s share of market in SME and personal insurance in New Zealand is minor and competition in these areas is very strong.”

Another boost to market share could also come in the coming months when Steadfast Direct is rolled out in New Zealand, the date of which has yet to be confirmed.

Steadfast Direct, which is underwritten by Berkshire Hathaway, allows Steadfast Network Brokers to sell home and motor insurance direct to their clients and is due to be fully rolled out to Steadfast’s broker network in Australia next month.

The IAG spokesperson also said the high end corporate component of the deal would not affect IAG’s corporate customers in New Zealand and would have little or no direct impact on brokers.

A spokesman for the New Zealand Commerce Commission said while the effects of the deal on the New Zealand market did appear to be minor, he confirmed that they had not been contacted by IAG on the matter.