AA Life planning to sell lots of insurance
Advisers could well see some benefits from the AA Life direct sales business set up by AA and Asteron.
Friday, February 24th 2006, 12:55PM
AA Life is targeting young families with household incomes of between $40,000 and $80,000.
“Once household income is more than $100,000 you’re probably better served by having a tailored product through an adviser,” AA Life general manager Paul O’Sullivan says.
“Anyone who is in this pool will be referred to advisers.”
He says advisers have done a good job selling to a more sophisticated audience and that AA Life will refer some enquiries to advisers.
“(AA Life’s policies) are more simplified and don’t have the bells and whistles you find on adviser products,” O’Sullivan says.
While many firms have had a go at selling life insurance online, none have been a huge success.
O’Sullivan says that a key factor which will make the AA/Asteron joint venture successful is the brand of AA.
He says it is one of more highly respected brands in the market and the organisation has more than one million members.
Also important in the equation is the reputation of the life insurer and its claims paying ability.
AA has offered life insurance products before, and these have tended to be a policy from an insurance company with an AA logo on them. Also they have been pushed as campaigns through the AA magazine.
Two key differences with the new offering are that it is always available and the products are designed for the target market.
This change means that people can buy their insurance whenever they are ready, and on their own terms, O’Sullivan says.
O’Sullivan expects more life insurance companies will look to sell directly to customers.
“Most life companies are looking for ways to broaden their distribution,” he says.
Asteron can be successful here and not upset its adviser network as it is selling under the AA brand.
O’Sullivan says the major competitors for AA Life are the banks. He says, although AA Life’s policies are competitively priced, that price isn’t the biggest factor for success.
Rather it is making sure customers understand what they are buying.
“If you don’t need life insurance we won’t sell it to you.” However, because New Zealanders are heavily under-insured AA Life is planning to sell a lot of insurance.
“I would expect that in the next nine months we should be able to acquire 8000-odd policies.”
“That’s very conservative,” he says.
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