Insurance Australia Group is selling its health insurance arm, NRMA Heath, because it can’t compete on the costs and benefits of major health insurers, says CEO Michael Hawker.

As part of the $100 million sale, MBF MD Eric Dodd – Mr Hawker’s predecessor – will join IAG in incorporating an “innovative marketing alliance” between the groups, including a six-year alliance in which IAG will offer customers competitive health insurance policies underwritten by MBF. 

“We don’t have the same advantage of scale in health insurance that we enjoy in our general insurance business,” Mr Hawker said last week.

Mr Dodd said recently that MBF group was planning on expanding its reach and that as the ex-CEO of IAG he had a personal interest in the group.

Describing the sale as a “logical fit,” Mr Hawker says the move “allows IAG to continue its focus on general insurance, while leveraging the expertise of one of Australia’s leading health service providers.”

Mr Dodd said the sale will enable MBF to further pursue its plans to increase its market share and develop its reach in SA and WA where its penetration is limited.