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Roger Carr, who is Chairman of the Board of Centrica, the parent group of British Gas, will have his hands fuill in 2010 with British Gas's move into the insurance sector as well keeping up with his responsibilities as Chairman of Cadbury plc.
BRITISH Gas has lofty ambitions of being a top ten insurance company. Moving from an intermediary to an underwriter is often a step too far, and it has a history of failed insurance initiatives.
Money Market asked the energy supplier a few questions including how it could succeed where scores of electricity companies failed, when and why it had sold or pulled out of insurance ventures in the past; but it reverted to its secretive roots by refusing to answer.
Peter Gerrard from Moneyextra.com comments: "The decision by British Gas to return to the insurance market is a brave step considering this has been attempted before. If handled correctly, and lessons learned in the past are acted upon, they stand a strong chance of being able to create an impact in what is becoming a stagnant marketplace.
“In their favour, he continues, “British Gas has a well known and established household name and a network of hundreds of thousands of existing customers whom they can promote this offering to.
“The market has been unchanged for several years, so needs new competitors. But as banks, building societies, supermarkets and utility companies have found out, having instant access to millions of customers doesn’t necessarily mean an overnight success with insurance sales.
“Nobody wants to have to have insurance, so pricing will be key. If the policy is too expensive then consumers will inevitably look elsewhere."
British Gas, owned by Centrica with a customer base of 4.5 million, has been granted Financial Services Authority approval to underwrite its own household and warranty products. The group aims to create a top ten UK insurer within three years. To do this it would have to convert every British Gas customer to new insurance products, to overtake the £1.5 billion premiums of tenth place insurer Allianz.
The company has an in-house intermediary, Home Assistance UK, to arrange warranties using underwriters such as Chartis and RSA.
British Gas is now trialling new insurance products and hopes to roll out protection for boilers, central heating systems, home electrics, plumbing and drains this year.
Halifax was in the market when it underwrote household insurance cover, but the sale of the bank ended that line of the business.
By Ian Youngman |
