CBA offloads general insurance arm to Hollard, enters 15-year CX innovation partnership deal

CBA Hollard General Insurance Sale

The Commonwealth Bank of Australia is offloading its CommInsure General Insurance unit to the Hollard Group, with the companies also entering a 15-year partnership to enhance customer engagement for the brand.

The sale is set to be complete by mid-2022 and involves an upfront fee of $625 million.

As part of the deal, CBA’s banking arm will continue to distribute home and motor insurance products for its erstwhile general insurance brand.

CBA anticipates receiving a pre-completion dividend as well (amount subject to the timing of completion, business performance and regulatory approvals).

In the interim, the bank will continue to reap profits from the distribution of home and motor products through the award-winning CommBank mobile app.

Through the new partnership, CBA and Hollard will also “co-invest in innovation” to deliver “market-leading” customer experiences, the pair said, drawing on the bank’s digital prowess and extensive branch network whilst leveraging the insurer’s “enhanced claims technology”.

“The transaction is consistent with CBA’s strategy to deliver differentiated customer propositions and the best integrated digital experiences,” the CBA chief executive Matt Comyn said in a statement.

The transaction further reflects the bank’s ongoing simplification drive. Recently, the bank has divested its non-core business units, including CommInsure Life Insurance, trade solutions provider AUSIEX, and its controlling stake of investment firm Colonial First State.

Indeed, ‘simplification’ has emerged as a common goal among Australia’s big four banks, with NAB, Westpac and ANZ similarly offloading peripheral businesses to reduce complexity of their processes and digital infrastructure.

For Hollard, on the other hand, managing director Richard Enthoven said the acquisition was pivotal to launching the insurer from a “challenger brand” to a “top five general insurer” in Australia.

“We [CBA and Hollard] have a shared vision for the future of home insurance, the potential for better customer outcomes, and an exciting role for digital innovation along our entire value chain,” Enthoven said.

Earlier this year, Hollard went live with a new insurance administration platform powered by Duck Creek Technologies, having successfully integrated its personal motor, home, and landlord insurance lines with the help of systems integration partner Xceedance.

Speaking at FST Media’s Future of Insurance, Sydney 2020 last March, chief information officer Jamie Smith was vocal about the insurer’s ambitions to depart from its business-as-usual approach to IT and, instead, explore opportunities to innovate for greater business value-add.

Headquartered in South Africa, Hollard’s Australian arm has more 800 employees and serves 1.2 million customers with products including motor, home, contents, pet, and commercial insurance through partnerships with domestic brands.