SUNCORP -, DOC:
FilE No:
MARS/PRISM: L:~';'::~--------=""-~ncorp Personal Insurances
4 February 2015
The General Manager Adjudication Branch
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Australian Competition and Consumer Commission GPO Box 3131 Canberra ACT 2601
Suncorp Group Ltd ABN 66 145 290 124
Level 33, 530 Collins Street Melbourne VIC 3000
Telephone: (03) 86504416 Email: [email protected]
Lodged in person at Level 35, The Tower, 360 Elizabeth Street, Melbourne Central
Dear Sir/Madam,
Re: Notification of exclusive dealing - AAI Limited trading as AAMI
Please find enclosed notification of exclusive dealing in relation to AAI Limited's sale of AAMI branded contents insurance policies.
The $100 fee will be paid at the Commission's Melbourne office, over the counter by credit card.
Should you require any further information in relation to this notification, please call me directly on 03 86504416 or email [email protected]
Yours sincerely,
Martin Imosa Lawyer, Suncorp Group Ltd
1
Form G
Commonwealth of Australia Competition and Consumer Act 2010 -sub-section 93(1)
NOTIFICATION OF EXCLUSIVE DEALING
To the Australian Competition and Consumer Commission:
Notice is hereby given, in accordance with sub-section 93(1 ) of the Competition and
Consumer Act 2010, of particulars of conduct or of proposed conduct of a kind referred to sub
sections 47 (2), (3), (4), (5), (6), (7), (8) or (9) of that Act in which the person giving notice
engages or proposes to engage.
1. Applicant
(a) Name of person giving notice:
AAI Insurance Limited ABN 48 005 297 807 (AAI) trading as AAMI;
(referred to as "the Insurer").
(b) Short description of business carried on by that person:
General insurance in Australia, including the sale of jewellery insurance as part of domestic contents insurance policies.
AAI operates under Australian Financial Services Licence 230859 and is regulated by
the Australian Securities and Investments Commission and the Australian Prudential
Regulation Authority.
(c) Address in Australia for service of documents on that person:
clo Martin Imesa Lawyer Suncorp Group Level 33 530 Collins Street Melbourne VIC 3000
2. Notified arrangement
(a) Description of the goods or services in relation to the supply or acquisition of which this
notice relates:
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Benefits offered to holders (both current and future) of AAMI contents insurance
policies issued nationally by the Insurer.
(b) Description of the conduct or proposed conduct:
1. Pursuant to the terms of the Insurer's AAMI contents insurance policies
("Policies"), the customer is covered for loss or damage to their insured
jewellery where such loss or damage is caused by an insured event.
2. The conduct subject to this application involves the Insurer providing the
customer with the choice of using:
• a repairer nominated by the Insurer ("Recommended Repairer"), or
• a repairer of the customer's choice,
in the event of such loss or damage to the insured jewellery, with varying
benefits depending on the choice made. This conduct is more particularly
described below:
2.1 in circumstances where the Insurer assesses damaged jewellery as
capable of being repaired, the Insurer will obtain a quote from a
Recommended Repairer (in all such cases).
2.2 where the customer chooses to use the Recommended Repairer, the
Insurer will directly arrange and pay for the repairs and provide a lifetime
guarantee on those repairs .
2.3 where the customer wishes to use their own repairer, they are required
to submit a quote from their repairer and the Insurer will compare it to
the quote provided by the Recommended Repairer. The Insurer will
authorise the more competitive and complete quote and provide a
lifetime guarantee on those authorised repairs which it arranges and
pays directly for (including where the Insurer authorises and arranges
and directly pays for the customer's choice of repairer).
2.4 where the repairer chosen by the customer has not provided the more
competitive and complete quote, and the customer insists on using their
chosen repairer, then the Insurer will cash settle the customer the
amount of repairs quoted by the Recommended Repairer. The Insurer's
Policy enables the insurer to cash settle any claim at the Insurer's
discretion. The customer is then able to arrange and authorise repairs
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with their insurer. The insurer will not provide a lifetime guarantee on
those repairs.
2 .5 A related body corporate of the Insurer has entered into non-exclusive
agreements with various Recommended Repairers. Each agreement
requires the Recommended Repairers to provide warranties on the
standard or repairs they provide.
3. The benefits in using a Recommend Repairer, or the customer's repairer where
authorised by the Insurer, are as follows :
3.1 While the customer is not disadvantaged in terms of their entitlement to
use a repairer of their choice, the customer will receive the benefit of a
lifetime guarantee on those repairs if they use a Recommended
Repairer or the Insurer authorises the repairs quoted by the customer's
choice of repairer.
3.2 In using a Recommended Repairer, the customer will enjoy the
convenience of not having to arrange and manage the repairs.
3.3 If the repairs provided by a Recommended Repairer are faulty or sub
standard, the Insurer will require the Recommended Repairer to
complete the necessary remedial work, or appoint a different repairer to
complete the necessary work if required at no extra cost to the
customer.
3.4 The Insurer can provide a lifetime guarantee on repairers provided by
the Recommended Repairer because it has control and oversight over
the repair process.
3. Persons, or classes of persons, affected or likely to be affected by the notified
conduct
(a) Class or classes of persons to which the conduct relates:
Customers who hold or may hold in the future AAMI contents insurance from AAI
(trading as AAMI) .
(b) Number of those persons:
(i) At present time: Page 3 of 6
191,088, as at 31 December 2014.
(ii) Estimated within the next year:
No significant changes are expected to the above.
(c) Where number of persons stated in item 3 (b)(i) is less than 50, their names and
addresses:
Not applicable.
4. Public benefit claims
(a) Arguments in support of notification:
In addition to the benefit of a lifetime guarantee where the customer uses a
Recommended Repairer or the Insurer authorises a repairer of the customer's choice,
other benefits are as follows:
• the arrangement is likely to increase competition in the insurance industry, as it
may encourage competitors in this market to offer similar benefit to their
customers;
• the Insurer will make the necessary arrangement with the Recommended
Repairer on behalf of the customer, and the invoice is issued directly to the
Insurer;
• the arrangement also has the potential to foster business efficiency, and
improve product quality.
(b) Facts and evidence relied upon in support of these claims:
None.
5. Market definition
Provide a description of the market(s) in which the goods or services described at (2)(a)
are supplied or acquired and other affected markets including: significant suppliers and
acquirers; substitutes available for the relevant goods or services (for example
geographic or legal restrictions):
The relevant market that may be affected is the market for contents insurance products.
The other market that may be affected is the jewellery repair industry, which we
understand to be a service ordinarily provided by the broader retail jewellery industry.
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The Insurer distributes its contents insurance products directly, by phone and online
sales. These products are available nationally.
Similar contents insurance products can be purchased from a range of competitors to
the Insurer.
The Insurer's market share of home insurance, for the AAMI brand, of the market within
Australia is 11.05%.
Note: the above figure is reflective of both contents and building insurance risks.
Source: Roy Morgan Single Source (Australia), Total Home Insurance, 12 months to
November 2014, base Australians aged over 18. We estimate that the market share of
contents insurance is commensurate with the above figure.
6. Public detriments
(a) Detriments to the public resulting or likely to result from the notification, in parlicular the
likely effect of the notified conduct on the prices of the goods or services described at
2(a) above and the prices of goods or services in other affected markets:
The Insurer is unaware of any detriment to the public that is likely to result from the
notified conduct describe in item 2(a), particularly given that:
• customers are not prevented from obtaining services from a jewellery repairer of
their choice.
• There is no premium discrimination involved in the Insurer's conduct. That is, the
Insurer does not propose to offer a discount on an insurance premium on condition
that the customer will subsequently obtain the services of a Recommended
Repairer in the event of a claim .
• There are a number of substitute insurance products available to potential
customers of the Insurer.
• The cost of the products specific at 2(a) above will not increase as a result of this
arrangement.
• The vast majority of AAMI jewellery insurance claims result in replacement or cash
settlement outcomes, not repair. For example, in the cases of theft or accidental
loss or jewellery.
Given that a relatively small section of the public will be affected by the proposed
arrangement, and the specific nature of the benefit, the affect of this arrangement on
the Australian contents insurance industry is also likely to be small. Consequently, it is
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unlikely that the arrangement would be seen as leading to any meaningful lessening of
competition in that market. It is also likely that the benefits offered to customers under
the arrangement would be seen as more significant than any consequential lessening
of competition in the jewellery repair market.
(b) Facts and evident relevant to these detriments
Attached to this Notification is the AAMI Contents Insurance Product Disclosure
Statement, which contains the terms and conditions of the arrangement, and which
demonstrates that customers will have the option of using their own repairer or a
Recommended Repairer. Refer to pages 48, 53 and 57.
The equivalent repair guarantee policy wording is also found in AAMl's lower cost
contents product, Fire and Theft Contents Insurance. It's Product Disclosure Statement
is available at www.aami.com.au/sites/defaultlfiles/fm/pdf/home-fire-theft-pds.pdf
7. Further information
(a) Name, postal address and contact telephone details of the notifying party authorised to
provide additional information in relation to this notification:
Mr Martin Imosa Lawyer Suncorp Group Level 33, 530 Collins Street Melbourne VIC 3000
Dated 4 February 2015
Signed on behalf of the applicant
.... ... ~~ ...... " .. (Signature)
Martin Imosa (Full name)
AAI Limited (Organisation)
Lawyer
(Position in organisation)
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