New Zealand brokers may find their options squeezed after the IAG purchase of Aviva’s Australian and NZ general insurance units. But IAG’s most senior executive in NZ, David Smith, says he doesn’t expect there will be a lessening of competition.

The deal has placed NZ’s second and third-largest insurers – State and NZI – under IAG control. Royal & SunAlliance, which is undergoing its own parent-generated insecurities at present, remains the largest insurer in the market. 

While no changes to the management structures of NZI and State are expected before the new year, media reports suggest the head office functions of the two insurers are likely to be merged. However, Mr Smith has indicated that individual brands and offices will be retained. 

Job losses are likely, but Mr Smith has been typically positive about the new ownership arrangement. He will now be overseeing a combined 40-branch network with about 1800 staff.

He said IAG will double its premium income in the next five years through organic growth and acquisitions.

It bought State Insurance in February 2001 to gain a foothold in the NZ market. Local analysts have been generallly kind about the new ownership arrangement, although there is some concern at the level of exposure to earthquake-prone Wellington. That may cause a few reinsurance problems for the larger entity.