IF you’re like me, you will have your spreadsheet handy, with columns reading “Does this provider offer me hire car cover after an accident”, “What’s the value of cover for personal items damaged or stolen” and “What bonus incentives do they offer”. That way you can compare price and value for money.
And then you have the car insurance company your husband has been loyal to for 10 years and refuses to leave. He is most likely with one of the major car insurance providers, companies such as AAMI or CGU, which are underwritten by Suncorp-Metway and IAG — holding the majority of the market share.
At one end you have the dominant players and at the other you have the “challenger” brands that are so new to the car insurance market that you’ve never heard of them before or have been around for a while but are still the underdogs of the major competitors.
Many smaller providers have been popping up in Australia for the past couple of years. We’ve seen Youi, Bingle, Progressive and Virgin Money try to take a piece of the car insurance pie, and well-known household brands such as Australia Post and Coles have also set up shop.
And with the many marketing campaigns sprawled across the media telling us to “un-worry” (NRMA) and pay less or get $50 (Budget Direct), can we really trust the smaller car insurance providers?
In Australia, there is regulation that all car insurance providers must comply with in the Australian Car Insurance Code of Practice. You can read a copy of the code Insurance Council website. They also need to hold an Australian Financial Services Licence (AFSL). Car insurance providers usually have their AFSL number on their websites.
All car insurance providers have underwriters (or they’re underwriters for themselves), which provide the financial backing and also have the authority to approve claims. In Australia, almost every underwriter is a well-established, large company with a huge financial base. For instance, Suncorp has more than $95 billion in assets and A&G Insurance Services (underwriters for Budget Direct) generates $2 billion in annual income.
So there’s plenty to be wary of when you are comparing car insurance providers but there’s also a lot of reassurance you can find when you’re doing your search. It is worth spending a little time to get the best deal because after all, it will be more money in your pocket if you find a cheaper deal.
Michelle Hutchison is Consumer Advocate at RateCity.
The above information is general only and does not take into account your objectives, financial situation or needs.
