Insurance products have been available in supermarkets overseas for more than 10 years with great success, but the direct distribution model has yet to appear on the Australian market.

If the success of UK supermarket giant Tesco’s banking and insurance operations is anything to go by – their growth has stunned rival retail chains – it would seem logical that Australian insurers would jump at the opportunity.

Yet this doesn’t seem to be the case. Or if they’re in the pipeline, everyone is keeping very quiet about it.

Perth-based conglomerate Wesfarmers owns the Coles supermarket chain and associated retail businesses, as well as several insurance operations. And Coles archrival Woolworths has never been slow in taking up new ideas.

Coles spokesman Jim Cooper told insuranceNEWS.com.au while the supermarket is not making any announcements on a move into the insurance space, it is “always looking for new opportunities to enhance [its] customer offer”.

And Lumley Insurance CEO Vivek Bhatia told insuranceNEWS.com.au that Wesfarmers’ subsidiaries are always looking for growth opportunities.

“At any given time there are always opportunities that you look at and consider with very clear investment guidelines that we impose on ourselves,” he said.

“One of the key things that we are very focused on is making sure we consider opportunities and if we think there is a profitable growth opportunity that exists within that segment then we’ll pursue that.”

But speaking in specifics is just too hard. There’s little doubt the local retailers have done their research, and the big UK retailers like Sainsbury’s and Tesco will have provided them with plenty of information on how to sell simple insurance products over the counter – products like car, home and contents, pet, travel, and even breakdown cover. Less simple products like life, health and dental cover are also available.

But the Australian regulatory environment for insurance is quite different from that of the UK, and it’s possible the retailers and their insurance allies may have decided the implementation costs and the underwriting challenges are just too daunting. Direct insurance is no game for learners.

Lumley Insurance doesn’t have a direct operation, and it may be that the company would find the necessary investment in technology and staff too expensive. There’s no guarantee that Australian consumers would embrace the concept, either.

The UK media has also made much in recent years of the shortcomings of some claims pursued through Tesco and Sainsbury’s.

Overseas studies, such as a UK study by financial information site This is Money, have also suggested that while supermarket insurance products may be cheaper, value for money is not always there.

While Tesco beat its competitors for home and pet insurance, shopping around online found cheaper or better value policies in car, travel and life insurance and personal loans.

The size of the two Australian supermarket leaders’ potential customer bases has to be factored in to any consideration of new insurance operations.

CommInsure Executive Manager Business Growth Services Jeffrey Scott told insuranceNEWS.com.au he doesn’t believe the Australian market is ready for insurance in supermarkets – yet.

He says Australians are still generally unaware of the importance of insurance, highlighted by the prevalence of underinsurance in this country.

But he does predict a change in attitude over time.

“There is a small segment of the market that does purchase insurance in a ‘no-advice’ situation, and one would predict this segment will grow over time as general public awareness campaigns start to take effect, and as products become more simple and easier to purchase,” Mr Scott said.

“Alternate channels such as the internet and supermarket will increase as demand increases.”

Whatever the quality of the products sold overseas, it does not change the fact that opportunities from selling insurance products in supermarkets – such as exposure and convenience – are tempting.

Mr Scott believes if the local insurance market continues to refuse to innovate, the international insurers will eventually try to break into the over-the-counter market.

So no one is yet prepared to state with confidence that Australians will happily accept buying simple insurance products at the supermarket.

But while everyone involved seems hesitant to discuss the possibilities, a move to over-the-counter insurance products – perhaps underwritten by insurers skilled in the vagaries of the direct market – is a concept whose time is rapidly drawing closer.