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Virgin moves into auto insurance
September 30, 2009
VIRGIN Money, part of Sir Richard Branson's Virgin group, aims to shake up the Australian financial services scene, launching an auto insurance product.
This will be followed by deposits and loans in coming months.
Sir Richard launched Virgin Car Insurance in Sydney today, saying he could offer Australians 35 to 40 per cent cheaper auto insurance than current insurers.
"We have a team in Australia who look for businesses where consumers are being taken for a ride," Sir Richard said.
"The challenge is to get people to compare, but we have a strong brand and we've done this before."
Sir Richard said Virgin Money would also launch banking products over the next 12 to 24 months including deposits, personal loans, home loans and credit cards.
In the Australian auto insurance market, most brands are owned by Insurance Australia Group Ltd and Suncorp-Metway Ltd, who together hold about 75 per cent of the market.
Sir Richard said Virgin Money was expecting to have 40,000 to 50,000 auto insurance customers by the end of 12 months, and would offer products capped for two years, and 13 months for the price of 12, when customers sign up to comprehensive cover online.
Virgin Money's auto insurance will be underwritten by Auto & General Insurance Company Ltd, one of South Africa's biggest general insurers, which is aiming to expand in Australia.
Sir Richard said he wanted to take advantage of Virgin's brand strength in Australia to sell the financial products.
"The Virgin brand is strong and we will be tying the brands together," he said.
That may involve offering deals on flights with airline V Australia for customers of the financial products, Sir Richard said.
Virgin Money has a deal with Citigroup to provide banking products under the Virgin brand.
Virgin Money managing director Matt Baxby said the company's aim was to sell products mainly online, backed up by call centres. The company also may open retail stores.
Mr Baxby, who was in charge of Virgin Money's UK business, said there was a big opportunity in a banking market, now dominated by the big four banks.
The big four are Commonwealth Bank of Australia Ltd, Westpac Banking Corporation, ANZ Banking Group Ltd and National Australia Bank Ltd.
"Our intention is to build a significant scale of business," Mr Baxby said. In the UK, Virgin Money has about 2.5 million customers and revenue of about STG100 million ($A183.03 million), he said.