ANZ’s insurance battle gets heated
(06 April 2010 – New Zealand) A legal battle involving ANZ National and Tower Insurance involving NZ$70 million worth of premium income has moved to the Court of Appeals.
The fight erupted over the ‘ownership’ of 110,000 customers representing nearly 200,000 general insurance policies.
ANZ and Tower had an agreement in place where Tower provided bank-branded fire and general insurance policies to ANZ’s customers, creating a powerful arrangement which allowed Tower to benefit from the bank’s 1.2 million customers and ANZ gained benefit through the creation of a one-stop-shop for its customers, particularly homeowners.
Under the agreement ANZ receive a commission for each policy sold and a slice of the profits; Tower took care of all of the claims and the administration of all of the policies.
In 2005, ANZ chose to terminate the agreement with Tower and to proceed using Vero as its new underwriter.
As a result of the Termination of the agreement Tower refused to relinquish control of the customers that had signed up when the agreement was in place, the customers are valued at around NZ$70 million, about a third of Towers premium income.
As the customers came up for renewal, Tower was still resigning the customers under ANZ’s insurance brands.
Early last year the High Court ruled that when Tower sold the original customer a policy through the bank, they also became a customer of Tower’s.
ANZ has now taken the decision to the Court of Appeals and the bank’s lawyer, Jack Hodder, has said that the matter is one of grave concern for the bank.
Tower was benefiting from the ANZ National Bank brands at the expense of the bank, Mr Hodder said.
ANZ has moved to the Court of Appeals because the High Court's decision undermined a clause in the agreement that prevented Tower from having any contact with ANZ National Bank policyholders for up to two years other than to administer existing policies.
That time was needed to allow the bank to put a new underwriting alliance in place with Vero, Mr Hodder said.
The bank argued that after termination of the agreement, Tower could continue to service current insurance policies, but could not sell or renew bank-branded policies.
ANZ and Tower had an agreement in place where Tower provided bank-branded fire and general insurance policies to ANZ’s customers, creating a powerful arrangement which allowed Tower to benefit from the bank’s 1.2 million customers and ANZ gained benefit through the creation of a one-stop-shop for its customers, particularly homeowners.
Under the agreement ANZ receive a commission for each policy sold and a slice of the profits; Tower took care of all of the claims and the administration of all of the policies.
In 2005, ANZ chose to terminate the agreement with Tower and to proceed using Vero as its new underwriter.
As a result of the Termination of the agreement Tower refused to relinquish control of the customers that had signed up when the agreement was in place, the customers are valued at around NZ$70 million, about a third of Towers premium income.
As the customers came up for renewal, Tower was still resigning the customers under ANZ’s insurance brands.
Early last year the High Court ruled that when Tower sold the original customer a policy through the bank, they also became a customer of Tower’s.
ANZ has now taken the decision to the Court of Appeals and the bank’s lawyer, Jack Hodder, has said that the matter is one of grave concern for the bank.
Tower was benefiting from the ANZ National Bank brands at the expense of the bank, Mr Hodder said.
ANZ has moved to the Court of Appeals because the High Court's decision undermined a clause in the agreement that prevented Tower from having any contact with ANZ National Bank policyholders for up to two years other than to administer existing policies.
That time was needed to allow the bank to put a new underwriting alliance in place with Vero, Mr Hodder said.
The bank argued that after termination of the agreement, Tower could continue to service current insurance policies, but could not sell or renew bank-branded policies.
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