If I asked this question to most Australians I think their answer would be 15, or 20 maximum. But in fact there are over 70 auto insurance companies offering car insurance to Australian drivers. Many of these insurers are owned or more importantly underwritten by the same company which means that many policies and products are almost identical. I have rambled on in many of my previous articles the importance of the underwriter in making a proper comparison so I won't go into it, but of those 70 insurance companies, there are probable only 15-20 underwriters.
So how can so many insurance companies survive? Some do it through innovative products, some do it with cheap prices, others have been selling insurance in Australia for many years and have built up a reputation as a strong car insurance brand and other can leverage of large customer bases to sell insurance and collect a commission for their troubles.
There are five main types of companies which have their own branded car insurance;
1- Companies which have been doing business in the Insurance Industry for years (ie, CGU, Allianz, AAMI, RACV)
2- Companies that offer and innovative non-standard car insurance products and features (ie, cashback, youi, PAYD, Bingle, LSV, Dawson, Famous, Shannons)
3- Overseas companies (Budget Direcr, Real Insurance, Progressive Direct, eCar)
4- Financial companies with large comsumer base to potentially sell insurance to (ie, ANZ, Commonwealth, Westpac, NAB and Bankwest)
5- Non financial companies which are able to leverage off their large customer base or are a company dealing in a related good. Examples here include Beaurapaires (typically a tire distributor and manufacturer) and Australia Post (have millions of customers).
Is it a good thing that there are so many companies to choose from? Definitely! Choice is good for consumers and the Australia car insurance market has opened up significantly in the last 5 years. A greater choice means more competition from the insurance companies meaning they have to work harder and harder to get your business which usually includes lower prices. Car insurance comparisons sites would increase competition even further but at the moment it has proven difficult due to the reluctance of the major player to participate; But a few websites are popping up helping consumers make a better choice.
So next time you need car insurance and are thinking you have a small range of choices, think again! There are plenty of auto insurance companies in Australia desperate for your business and by shopping around it is not uncommon that you could save hundreds of dollars.