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Insurance price war imminent

WA BUSINESS and the public are set to be big winners in an insurance war about to break out.

New South Wales insurance giant NRMA is likely to float on the Australian Stock Exchange in the near future.

Funds gleaned from the float could be used as a war chest for the SGIO, the WA insurer NRMA bought in 1998.

The NRMA is not ruling in the possibility of the SGIO being allowed to offer discount premiums. It is not ruling it out either.

An NRMA spokeswoman said money raised in the float would be used to fund future business growth.

She said whether the money was used for discounted premiums or not depended on the WA marketplace.

The NRMA prices its insurance premiums at a commercial rate rather than a mutual one which means it can react more quickly to the marketplace.

RAC general manager insurance Tony Carter said it was likely the NRMA influence on the SGIO would make it more aggressive than it had been in the past.

“There has been an aggressive market in the eastern States for some time. It’s only a matter of time before that comes to WA,” Mr Carter said.

“The RAC has been creating a platform to manage its business in an aggressive marketplace.”

The SGIO and the RAC are the two biggest players in the WA general insurance market.

Stiffer competition between them is bound to bring benefits for consumers.

However, increased competition between the RAC and the NRMA is unlikely to hurt the relationship the two bodies share through the Canberra-based Australian Automobile Association.

Through this relationship, roadside assistance services in NSW are extended to RAC members and vice versa.

Mr Carter said the NRMA had been competing in the insurance market against its sister clubs in the eastern States for some time.

“I don’t think it has soured their relationship,” he said.

However, there is potential for NRMA to take over the RAC. It currently holds 70 per cent of Victorian-based AAA affiliate RACV.

In the eastern States market, RACV-branded products compete against NRMA-badged packages.

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