"Describe the various types of Industry consolidation across the Australian insurance market and discuss how these may impact customers."
Businesses often merge and consolidate due to various reasons and the Australian insurance industry is no exception. Historically, the underlying motivations for businesses to consolidate often vary and usually by reasons which are not mutually exclusive to each other:
Growth: By consolidating, an acquiring company is given an opportunity to expand their market share.
Diversification: In short, the goal of diversification is to merge with an organization within a key market.
Synergy: Synergy is the idea that by merging with another organization with complementary strengths and weaknesses, businesses can increase efficiency, productivity and profitability.
Competition: Many mergers usually allow the acquiring organisation to remove competition and again, expand their market share.
The Impacts
The acquisition of Wesfarmers Insurance Underwriting by IAG in mid-2014 highlights how consolidation can impact customers both positively and negatively.
The most obvious and …show more content…
The deal enabled Suncorp-Metway to secure brands held by Promina Group, effectively transforming Suncorp-Metway into an insurance heavyweight equipped with the tools necessary to compete with its competitors. Consequently, the impact particularly for customers and distributers included greater access to a broader range of insurance products and services which were specific to their individual needs and delivered via channels and brands which were well known and respected in their individual markets, all of which was backed by a company now with assets of over $63 billion. At the time, it was expected to generate net synergies before tax of at least $225 million
Businesses often merge and consolidate due to various reasons and the Australian insurance industry is no exception. Historically, the underlying motivations for businesses to consolidate often vary and usually by reasons which are not mutually exclusive to each other:
Growth: By consolidating, an acquiring company is given an opportunity to expand their market share.
Diversification: In short, the goal of diversification is to merge with an organization within a key market.
Synergy: Synergy is the idea that by merging with another organization with complementary strengths and weaknesses, businesses can increase efficiency, productivity and profitability.
Competition: Many mergers usually allow the acquiring organisation to remove competition and again, expand their market share.
The Impacts
The acquisition of Wesfarmers Insurance Underwriting by IAG in mid-2014 highlights how consolidation can impact customers both positively and negatively.
The most obvious and …show more content…
The deal enabled Suncorp-Metway to secure brands held by Promina Group, effectively transforming Suncorp-Metway into an insurance heavyweight equipped with the tools necessary to compete with its competitors. Consequently, the impact particularly for customers and distributers included greater access to a broader range of insurance products and services which were specific to their individual needs and delivered via channels and brands which were well known and respected in their individual markets, all of which was backed by a company now with assets of over $63 billion. At the time, it was expected to generate net synergies before tax of at least $225 million