Yahoo Finance Aldi's major play against Woolworths and Coles - but expert warns of 'trade-off'
The supermarket has launched Aldi insurance, which will offer home, car and landlord’s insurance.
German supermarket giant Aldi is getting in the ring with rivals Woolworths and Coles to offer customers insurance. As cost-of-living pressures hit households, Aldi claims its offering will give Aussies value at a competitive price point.
Aldi will be offering home and content insurance, comprehensive car insurance and landlord’s insurance for Aussies. These will be backed by Honey Insurance and underwritten by RACQ insurance.
Finder insurance expert Tim Bennett told Yahoo Finance the recent spotlight on the Woolworths and Coles had been good news for Aldi and insurance was another chance to win over customers.
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“The duopoly wars and the antitrust conversation has been great for Aldi. This is another opportunity for them to try and focus on what makes them different,” Bennett said.
Aldi said its new insurance offering “stays true to the company’s DNA” of giving customers simple products at a competitive price.
“We are excited to be expanding our ‘Good Different’ offering into new categories with ALDI Insurance bringing even more savings to Aussies at a time when they need it most,” ALDI Australia group director Rodney Balech said.
“We know that Australians have been calling for a trusted insurance provider that not only provides a reliable and accessible service but also doesn’t break the bank.”
What is Aldi offering?
Aldi said it hopes to strip out the complexity of insurance to deliver customers a “straightforward product” that offers “exceptional value”.
Bennett said Aldi’s insurance products were priced relatively competitively but the main point of difference was its partnership with Honey, which is a relatively new brand. That’s compared to Coles whose policies are underwritten by IAG and Woolworths who is with Hollard.
Through Honey, Aldi said customers can get a quote in just three minutes. For home insurance customers, it also offers smart sensors that monitor homes to help avoid household troubles like fire, water damage and theft.
“The actual online quotes process is very, very quick and clean,” Bennett told Yahoo Finance. “For a lot of Australians in a cost-of-living crisis that is super, super valuable.”
Traditional insurers usually ask customers a lot more questions as part of the underwriting process, which Bennett said can have pros and cons.
“The benefit to more questions and a longer quote process means that you will typically get a price that’s a better reflection for your risk profile,” Bennett said.
“So there is a bit of a trade-off there for a quick and concise quote, you sometimes need to make assumptions about your customer which can mean you end up in a higher risk category and pay a higher premium. So there’s a balancing act.”
Aldi has also noted it will keep pricing the same for both new and existing customers. It comes after a class action lawsuit was launched against IAG, with Slater and Gordon claiming the insurer used pricing strategies to increase the premiums of loyal customers.
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