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It's hoped online life insurance will be lucrative for The Warehouse, as its Red Sheds struggle in the tough retailing environment.
Shares in The Warehouse (WHS) rose 0.9% or $3.37 today as the company launched another insurance product in its growing financial services division today.
Warehouse InstantLife is underwritten by the country’s largest life insurer Sovereign.
The focus on non-traditional retail products was a key plank in The Warehouse's plans to be a multi-faceted retailer and follows similar strategies of retail giants Tesco, Sainsbury and, closer to home, Woolworths.
Westpac is a 51% shareholder in the Warehouse financial services joint venture, currently providing between 5-10% of the company’s net profit.
General manager of The Warehouse Financial Services Phil Devlin said in keeping with The Warehouse's "cheap and cheerful" brand values, Warehouse InstantLife was focussed on value.
"We're trying to get some Warehouse price point an value proposition but with some comfort around the fact we've got a blue chip provider working with us," said Mr Devlin.
“The Warehouse is going through a fairly tough time at the moment so the income potential the financial services joint venture offers is lucrative and seen as something we perhaps haven’t worked as hard on in the past as we should have.”
Selling the products instore has not been a huge success. The Warehouse has had an insurance book with Sovereign for eight years but sales of the life insurance and accidental death insurance products were in decline.
"It's the right time to bring the product online, he said. The joint-venture gives Sovereign reach while providing The Warehouse with insurance expertise.
“We’re recognising the days in which you go into a retailer like The Warehouse and take an insurance brochure home and post it back are gone.”
He hoped combining the product’s mass appeal and online capability would be a popular formula for “middle-class New Zealanders”.
“We’re looking at those people for whom a quarter of a million dollars might settle their mortgage and keep their kids at school,” he said.
“Middle New Zealand recognises that life insurance is not sexy but something they should consider and perhaps, don’t feel comfortable going through those traditional [insurance sales] channels and want to use our site and dial up the cover to a level they feel comfortable with, from a value and cost standpoint.
“We’re going to try and build this up slowly. A more New Zealanders start to turn to the internet for their primary research, we’ll start to be indexed higher and higher on Google and hopefully we’ll have built us some testimonials by that stage to give it some credibility as well. “
The Warehouse estimates that around 75% of Warehouse InstantLife applications will be able to be processed online, without the need for any further information to be provided.
Mr Devlin said he was quietly pleased with growth in the travel insurance product, launched last year and underwritten by IAG.