High-profile contracts with Australia Post and Virgin Money have underlined the growth potential of the “white label” insurance market, according to underwriter Auto & General Insurance Services.

Under a deal announced last week, Auto & General will offer car insurance under a new deal with Australia Post. Travel, home and contents policies are also in the pipeline.

The insurer already underwrites car insurance for Virgin Money and GE Money, and Executive Director Michael Weston says Australia Post is a powerful brand that will attract customers who place price and trust as top priorities when buying insurance.

“Some customers need an attractive brand like Australia Post to bridge that trust element,” he told insuranceNEWS.com.au.

The company decided to underwrite local retailer-branded insurance after the South African company used the model successfully in the UK market.

Budget Insurance underwrites similar products for the Royal Mail and major retailer Marks & Spencer, with those and other partnerships making up 50% of its UK business.

Mr Weston says personal lines products like car, home and contents and travel insurance are “relatively commoditised and easily understood”.

“Given the reach and brand position within the community of Australia Post there are significant opportunities for growth.”

Auto & General Insurance Services provides all insurance infrastructure to both Australia Post and Virgin Money, and collaborates on marketing and distribution.

Mr Weston expects to grow the company’s Australian partnership business alongside Auto & General’s own retail insurers such as Budget Direct.

He says he isn’t concerned by the potential entry of powerful competitors such as Wesfarmers, which is trialling the sale of insurance products through its Coles supermarkets in Tasmania.

“It can be made to work if they get the bits and pieces right, and that’s where the risk lies,” he said. “Coles will access a whole range of people, but someone insured by a 100-year-old provider like RACV Insurance won’t buy insurance from Coles unless they can offer a better proposition.”

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