IAG has told New Zealand’s Commerce Commission that its takeover of Lumley New Zealand’s operations will not substantially reduce competition.

However, the Insurance Brokers Association of New Zealand has raised “significant concerns” in a submission to the commission.

Association CEO Gary Young told insuranceNEWS.com.au there was an unprecedented response when the group asked for members’ views on the deal, with brokers expressing concern about competition and capacity issues.

Last week the commission published an issues paper on IAG’s application to acquire Lumley from Wesfarmers. It requested submissions by February 21, with a March 28 deadline on its decision.

The paper says IAG argues there are no significant barriers to entry or expansion in the insurance market and that banks have significant “countervailing power” in personal lines because they can sell insurance to their large customer bases.

It says retailers such as The Warehouse already offer pet, life and travel insurance and “it would only be a modest step to begin retail provision of other personal lines insurance”.

“In commercial insurance markets, brokers exercise significant countervailing power due to their expertise, independence, importance as a distribution channel and ability to influence customer purchasing decisions.”

The paper notes Wesfarmers is retaining NZ broker Crombie Lockwood and says this indicates comfort with the ongoing competitiveness of the markets.

IAG’s major brands in New Zealand are NZI, State Insurance and Christchurch-based AMI.