Supermarket giant Coles quietly exited the life insurance industry less than three years after launching a directly distributed offer.
As of 1 January 2017, Coles Life Insurance policy holders became customers of MetLife - the insurer whose MetLife Essentials product was white-labelled by Coles.
Coles' exit from direct selling of life insurance leaves superannuation group insurance as the overwhelmingly dominant insurance direct channel in the sector. Analysis by Rainmaker revealed the Coles insurance offer, while being cheaper that some retail personal offers, struggled to match the SelectingSuper insurance group insurance benchmarks.
In May 2014, Coles introduced "new affordable life insurance, starting at as little as $1 a week" including its 'price beat' guarantee, underwritten by MetLife, in what then-Coles Finance director Rob Scott described as a natural progression for the company and in competition with rival Woolworths' range of insurances.
In a statement to Financial Standard, Coles confirmed the move, though offered no explanation for discontinuing its life products, other than the decision came "as part of a regular review of our product portfolio".
MetLife also confirmed the news, saying: "From 1 January 2017, Coles Life Insurance customers who held a current policy became MetLife customers. MetLife, which has backed Coles Life Insurance policies since their launch, has been providing these customers with continuation of cover and no changes have been made to the product as a result of Coles exiting life insurance. The process for customer queries and claims is also unchanged."
A possible driving factor lies in research conducted by Rainmaker Information in December 2014, showing that the average premiums for Coles Life Insurance - including a 20% Fly Buys discount - cost more than double as much as the average group insurance available via superannuation, when contrasted against the 2015 super fund High Risk group insurance benchmarks. The price increased three-fold for low risk members and four-fold for non-Fly Buys members.
Coles hasn't withdrawn from financial services altogether though, as it continues to offer its other existing insurance products through WFI Insurance, backed by Australia's largest general insurer, IAG.
"Coles remains committed to providing customers with great value on financial services and continues to distribute Coles car, home and landlord insurance, as well as Coles credit cards," the supermarket said.
MetLife said it is dedicated to providing the same level of cover and service to Coles' former life insurance customers.
"MetLife is committed to being there for customers when they need it the most and takes pride in delivering exceptional customer experiences," the statement from MetLife read.