Supermarket giant Coles once described selling life insurance as a “natural progression” for the business.
But the Wesfarmers-owned chain has quietly stopped selling life insurance, amid an apparent move away from financial services under Coles boss John Durkan.
“It [life insurance] was announced with a bit of fanfare, but it never really realised its potential,” said one person familiar with the decision. “It’s well publicised that Durkan is not a fan of financial services within a retail environment.”
Coles started selling life insurance in May 2014, promoting coverage for as little as $1 a week and promising to beat a direct life insurer’s price on comparable premiums.
Price matching is unusual and challenging for life insurers because policies are designed to be priced to the individual’s health risks.
Coles’ then finance director Rob Scott, “Through our home and car insurance offerings, Coles has already helped thousands of families save hundreds of dollars each year, and we think life insurance should be no different.”
Mr Scott, who is now deputy chief executive of Wesfarmers, had said that financial services were a great way to leverage the company’s brand, distribution and analytics as well as create “stickier” customers.
In response to Fairfax Media’s inquiries, Coles said, “As part of a regular review of our product portfolio, Coles ceased distributing life insurance products on 1 January.
“From this date, Coles Life Insurance customers who hold a current policy became MetLife customers.
“MetLife, which has backed Coles Life Insurance policies since their launch, has provided these customers with continuation of cover and no changes have been made to the product as a result of Coles exiting life insurance. The process for customer queries and claims is also unchanged.”
Coles rejected suggestions it never had more than 5000 policyholders, and that it had a very high proportion of people agreeing to buy a policy over the phone and then not proceeding.
Coles continues to sell car, home and landlord insurance, as well as credit cards.
Car, home and landlords are simpler products than life insurance, with lower regulatory risks and fewer competitors. Suncorp and IAG have about 80 per cent of the market in home and car insurance.
Rival Woolworths has sold insurance products – car, home, landlords, pet, life, travel and funeral – since 2012 and said it had no plans to stop selling life insurance.
The life insurance sector has been hit with rising claims, expensive premiums and negative perceptions of the industry after the scandal that engulfed the Commonwealth Bank’s insurance arm, CommInsure over the use of outdated medical definitions to deny claims.