Postal Services Can Offer Cheaper Car Insurance

The Australia Post is set on gaining a strong foothold in banking with its financial strategy of expanding the $24 billion general insurance sector. The financial services of Australia Post are looking into extending into mortgages and deposit-taking, things that need a banking license. Incidentally, application for one will usually take at least six months.

The Australia Post is a federal government owned corporation which may follow the footsteps of Kiwibank of the New Zealand Post. The direction seems appropriate to the desire of the government to promote good and healthy competition in the baking sector.

It has been suggested that most likely Australia Post will come into the insurance sector with offers of competitively priced car insurance via the internet as well as the telephone. This is accomplished by engaging in a revenue-sharing joint venture with the Auto and General Insurance services, a specialist industry provider. The direction will eventually include travel, home and contents insurance.

The speculation emerges as the company attempts to leverage its unequalled distribution network of 4453 branches nationwide, which is a lot bigger than the collective branch system of four big banks. Insurance is always the fifth line of operations by agency services. The other services include bill payments, over-the-counter banking for Commonwealth Bank, National Australia Bank and an additional 75 financial entities. Not to be forgotten are other auxiliary services like money transfers and identity services, with the Australia Post handling 90 percent and more of the country’s passport applications. All these activities total to an $83 billion worth of transactions for the Post each year, with its branches dealing with almost one million clients per day.

The Australia Post in its entry into the insurance market will be battling it out neck-to-neck with market leaders like IAG, QBE Insurance and Suncorp. In the cyberworld, Youi and Virgin are slowly finding their niche. Incidentally, countries like Brtain, France, Germany, Italy, Singapore and Japan have postal organizations expanding into the insurance market. In Britain for instance, one in about 50 cars are getting their car insurance from the postal service.

In Australia, the typical household gets to pay about $1609 every year on insurance, which is 3.4 percent of the gross expenditure. In addition, an estimated 1.1 million up to 1.2 million clients shift to a new car insurance provider each year. The financial crisis of the past year resulted in about 15 percent of car owners decreasing their coverage. They have switched to a less expensive option while some have canceled theirs altogether. Australia Post will in all probability offer good and affordable rates, perhaps even the cheapest in the market.