HBF has sold its General Insurance business to CGU. HBF is a not-for-profit health fund based in Western Australia, while CGU is a division of IAG, the second largest insurance group in Australia.
The West Australian reports that the companies would not disclose the value of the transaction. However it was revealed that HBF-branded products such as home and contents insurance, motor insurance and travel insurance will be distributed by HBF and underwritten by CGU over the next ten years.
HBF’s MD Rob Bransby reportedly said it had become clear that HBF’s interests were better served as a distributor rather than manufacturer of General Insurance products.
“It means we’ll continue to distribute competitive General Insurance products but these will now be provided by an insurer with all the advantages that scale provides,” he said.
Bransby said WA’s General Insurance sector had seen the entry of large overseas, eastern states-based and online insurers in recent years.
“It’s become clear to us that it will be increasingly difficult for HBF to compete effectively as a small local player against insurers who have massive advantages in terms of scale and technological infrastructure,” he said.
Mr Bransby said the choice of CGU was based on a strong cultural fit.
“A critical consideration was CGU’s agreement to employ the great majority of HBF’s general insurance team in Perth,” he said.
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