OPERATING PERFORMANCE

Australian
Consumer
Division

Consumer Division is an Australian market leader in home and motor insurance products sold directly to personal customers. It also offers CTP insurance and its distribution extends to affinity and financial institution partnerships and brokers and agents.

The NRMA Insurance Safer Homes website is the catalyst to empower customers to better understand home insurance, risk and the real value of their home. Since it was launched in October 2015, the site has amassed over 200,000 visitors.

RESULTS

The division’s gross written premium increased by 3.3%, to $5,801 million, and its underlying insurance margin was strong, at 16.0%, despite pressures on profitability from elevated claim frequency in New South Wales CTP. Its reported margin of 19.8% was boosted by significant reserve releases.

Gross written premium growth was driven by short tail home and motor products. Growth in motor came from an increase in motor policy numbers, and increased rates in response to higher claim frequency and repair costs. Home policy numbers were reasonably flat although higher rates contributed to premium growth.

The division’s larger established brands generated sound growth in a very competitive environment, with due and paid renewal levels for both motor and home remaining high, and exceeding last year’s levels. While coming off a much smaller base, Coles Insurance continued to record strong double-digit growth, supported by a series of initiatives including the introduction of landlord insurance from August 2015.

Overall long tail premium – primarily CTP insurance – was marginally lower this year. A lower share of New South Wales CTP registrations, as the division deliberately reduced its exposure to less profitable business, was offset by rate increases to address claim inflation. The business also lost further market share in the Australian Capital Territory CTP Insurance market, where a competing entity that first entered the market in 2013 has employed aggressive pricing activity.

CLOSER TO CUSTOMERS

During the year, the division introduced a range of product, service and distribution initiatives to meet customers’ varied – and changing – needs. These included:

• website optimisations, including a Self Service Dashboard that gives customers an instant view of actions required and a display of products and covers;
• improved web chat capability;
• improved motor claims capability for customers lodging claims on mobile devices;
• optimised digital home quotes, with PIN access to mobile self-service and online tracking of home claims;
• the first of a planned network of kiosks in shopping centres, showcasing NRMA Insurance’s online services as well as offering traditional services;
• the Safer Homes website to educate customers about the key risks in their suburbs;
• market-leading ride-sharing cover for people who use their cars for UberX;
• Insurance 4 That to insure individual household goods;
• ShareCover for homeowners renting their homes to short term guests through Airbnb and Stayz;
• the InsureLite home building insurance product designed specifically to address the issue of affordability by incorporating a pre-selected minimum damage threshold;
• a kilometres driven/garage reward for NRMA Insurance, SGIO and SGIC motor customers; and
• a customer feedback program to drive rapid improvements in customer experience.

OUTLOOK

The personal insurance market in Australia is expected to remain competitive, with modest growth prospects. In response, the division will focus on quality underwriting, increased efficiency and cost reduction.

Growth in the sharing economy, changes in consumers’ attitudes towards asset ownership and affordability concerns create opportunities for new insurance products. To reinforce its relevance to customers, the Consumer Division will continue to offer new products and services and focus on customer experience.

Profitability in New South Wales CTP insurance is expected to remain under pressure in the 2017 financial year, with rate increases only partially addressing the impact of increased claims frequency. Planned reform measures will potentially ease these pressures from the 2018 financial year.

Next year’s premium growth will be assisted by the division’s entry into the South Australian CTP market from 1 July 2016, where the SGIC brand has a 20% share.