INSURANCE AUSTRALIA GROUP is attempting to take on its rival Suncorp by cross-selling life insurance alongside sales of its traditional car and home insurance policies.
Insurers are trying to move into faster-growing financial services areas while sales growth from traditional car and home policies remains subdued.
IAG will repackage life insurance sold by a third party provider, TAL. Until last last year, TAL was known as Tower Australia. IAG will initially sell the life under its NRMA policy in NSW, before offering it in other states. In Victoria, an insurance venture with the motoring group RACV already sells life insurance policies.
The chief of direct insurance for IAG, Andy Cornish, said it made sense to move into life insurance sales as customers were demanding a broader range of insurance products. Life insurance in Australia is traditionally sold through superannuation funds, while financial planners sell the more complex products.
Suncorp, which sells insurance under the GIO and AAMI brands, already distributes life insurance through its own in-house life insurance arm.
Separately, analysts have speculated IAG could look to boost its stake in its Indian joint venture after a change to rules, allowing overseas companies to increase their investment in domestic insurers.
India's federal cabinet has allowed foreign direct investment in insurance companies to increase from 26 per cent to 49 per cent. However the change still needs to be approved by the Indian parliament.
IAG has a 26 per cent stake in its Indian insurance joint venture with State Bank of India. IAG executives have previously said they would be open to increasing the stake if ownership limits were increased. IAG initially invested $100 million.
A Deutsche Bank analyst, Kieren Chidgey, said while the green light on the foreign investment rule changes from the Indian cabinet was positive, there was still some way to go, because opposition parties generally appeared to be against the proposal.
Even so, Mr Chidgey said IAG was likely to build up its capital, rather than undertake special dividends or share buybacks, to give it the financial firepower to boost its stake if the opportunity arose.