A MERGER, an acquisition and a float have made 2003 a year of major change for the Western Australian insurance industry.
SGIO is currently in the throes of merging with its new stable mate, CGU, a process that will leave the insurer with a staff that has grown from 450 to 700.
It remains the largest insurer both locally and nationally through its owner, Insurance Australia Group.
Australia and WA’s third largest insurer Promina floated earlier this year. It has a 50-50 deal with the RAC, making the automotive group its representative eastwards of the sunset coast.
Most recently, Wesfarmers concluded its digestion of the insurance business of Lumley General, which will likely make it Australia’s sixth largest insurer.
In WA and nationally the market ranking is about the same – IAG, QBE, Promina, Suncorp (sold through GIO in WA), Allianz and Wesfarmers.
Insurance Australia Group State manager WA Garry Moore said the merger of CGU into SGIO would broaden the insurer’s offering to the WA market.
“CGU has predominantly been in the commercial and workers’ compensation markets. SGIO has been set in the direct market [home and car insurance],” he said.
Mr Moore said it would take the company about two years to get through the entire integration process.
That has been seen in the number of professional appointments made by IAG over the past two months, which he puts down to internal restructuring.
Wesfarmers’ further foray into the general insurance market has cost the group $375 million – $320 million for the business and the assumption of about $55 million in debt.
The conglomerate is creating the Wesfarmers Insurance Division to be headed by Wesfarmers Federation Insurance chief Bob Buckley.
The acquisition takes Wes-farmers from being a rural insurer to becoming a larger player in the general insurance market.
From RAC’s point of view, the Promina float has had little effect.
RAC Insurance general manager James How said the float had not changed things for RAC.
However, he said the general industry changes, driven by things such as the tougher regulatory requirements forced on insurers, were having an effect.
“There’s no doubt these changes will mean increased costs,” Mr How said.
Insurance Council of Australia WA group manager Daryl Cameron said the changes forced by the Australian Prudential Regulatory Authority, plus pressures on overseas insurers, had greatly changed the insurance landscape in Australia.
“There are certainly less companies operating in the insurance marketplace, particularly at the higher risk end of the market,” he said.
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