Australian brokers have nothing to fear and nothing to lose following IAG’s acquisition of CGU, according to IAG CEO Michael Hawker. Speaking at NIBA’s annual conference in Adelaide last week, he said that despite IAG being a company that sells direct, there is still a “strong need” for intermediaries.

Spelling out the thinking behind the shopping trip to London that landed CGU and NZI and their associated brands, Mr Hawker said the need to have intermediated business was “one of the reasons why we purchased CGU. We have both [direct and indirect] channel capabilities because we do believe it’s absolutely critical to have both.”

He said the need for insurance intermediaries will always exist because some customers simply do not like buying their insurance direct. “There will be some customers who will always want to come through a broker and some who want to come direct. We want to be able to have the capacity to deal with that breadth of customers.”

Mr Hawker said IAG has been slowly building its capability in terms of third party-distributed products. “If we spoke about it four years ago then you would have said we are a totally direct business. Now IAG has 16% of business broker-driven,” he said.

“There has been a movement in terms of building capacity, and this moves us in a big way because we will be 60% direct and 40% indirect. We intend to use CGU as our indirect brand and commercial brand and to use NZI as our indirect brand and commercial brand in New Zealand.”  

The IAG merger with CGU could also encourage brokers to broaden their product offering. Mr Hawker said IAG’s broad distribution base allows brokers to offer a greater range of products and increase their services by specialising in other areas such as life insurance and wealth creation.

“It’s a function of how good the intermediary is in their skill-set as to how they keep themselves in an appropriate position for the customer base,” he said. “For all the people who have licences and are appropriately qualified then there is nothing stopping them doing that.”