One of the most well known faces in the life insurance industry, Alan Betts, has teamed up with South African life insurer Capital Alliance to launch Australia’s first new life insurance company in four years.
Betts is the head of operations for PrefSure which is 80 per cent owned by Capital Alliance Holdings, a subsidiary of the South African life company. Former Capital Alliance finance director Russell Howden is the managing director of the new group.
Howden has been in Australia for the past year, initially working as a consultant and developing the strategy for the new group alongside Betts. The cornerstone of this strategy is to concentrate on manufacturing risk products and establishing distribution alliances.
PrefSure has already launched a term life policy with TPD and trauma cover options but is likely to manufacture products on a wholesale basis subject to the specification of distributors.
It is also looking to enhance its relationships with distributors through an offer of equity in the operation. Up to 15 per cent of the company will be offered to between six and ten medium sized financial planning groups ahead of a possible listing in five years.
“The trend of the past decade is for manufacturers to buy into distribution. We are reversing the paradigm by offering distributors equity in the business,” Betts says.
Howden says the group will pay level commissions on its products and will base the equity participation on the amount of risk insurance written to the group plus renewals.
Betts says PrefSure is a breath of fresh air for the life insurance industry. He says most life insurance groups have placed emphasis on the funds management side of their business to the detriment of their risk insurance operations.
“We have chosen to specialise as a wholesaler of risk products and to outsource a large part of operations including distribution,” he says.
Distribution will not be restricted to the dealer groups which form relationships with PrefSure. The group is also looking to form alliances with direct distribution outlets such as Internet platforms and companies with large customer bases.
