St Andrew's Signs 'em At Point Of Sale
Sydney Morning Herald
Monday January 28, 2002
Scottish insurer St Andrew's Group is prospering in Australia by selling car and home insurance as loans are taken out what is sometimes called debt-driven insurance.
The technique flies in the face of what is widely regarded as the most efficient marketing method, the common direct phone sale of personal insurance.
St Andrew's says debt-driven insurance sales are quicker and far more efficient and cost effective.
It claims the days of huge call centres selling insurance are on the wane due to their rising running costs, longer waiting times and the frustration factor for customers dealing with sometimes poorly trained staff.
These factors are overtaking the centres' early efficiencies.
St Andrew's manufactures consumer insurance policies sold exclusively through financial institutions, including a range of credit unions, RAMS Home Loans, BankWest and Capital Finance.
Some insurance companies, such as Royal & Sun Alliance, use the St Andrew's sales training and back-room processing packages to sell their own insurance.
Others adopt the whole product and systems package.
The company, with a claimed current share estimated at 10 per cent of the Australian retail insurance market, is confident of achieving a 40 per cent share within four years.
It is negotiating with a major credit union and has taken the first step in negotiations with one of the big four banks.
Computer software allowing for the seamless issue of a house, car, contents or other personal insurance policy was developed in Britain with the financial backing of the Bank of Scotland.
BankWest introduced the system to the Australian market four years ago.
John Van Der Wielen, managing director of St Andrew's Insurance (Australia), has concluded that call centre sales models have seen their best days.
Observing overseas experience, Mr Van Der Wielen said the most successful financial services marketing models were those where a consumer's incurring of a debt automatically generated an insurance policy sale.
``For every 100 calls a call centre takes, they are writing, on average, less than 30 policies," he said.
``You could say that 70 calls are a waste of time."
By contrast, the debt-driven sales strategy results in an average of 70 policy sales per 100 loans.
The system is simple. As the debt transaction is completed and the required borrower details are entered into the lender's computer system, borrowers are asked if they also want to take out home and contents, car or other personal insurances to protect the asset they are buying.
If they agree, the details provided for the debt transaction automatically feed into the insurance policy sale.
In effect, the process takes the borrower out of the insurance market while they are signing loan documents.
``It is pretty much debt driven," Mr Van Der Wielen said of the sales technique.
``The borrower walks away that instant with a certificate of insurance and the policy document goes out the next day through a mailing house."
Claims cheques are deposited electronically and St Andrew's keeps no hard copies of any insurance documents.
The system appears to be highly profitable.
St Andrew's in Australia produced an unaudited profit of $1.7 million in 10 months on an investment of $4 million.
In Britain, a turnover of $1.3billion was achieved with a staff of 300.
© 2002 Sydney Morning Herald
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