SUNCORP -, DOC:

FilE No:

MARS/PRISM: L:~';'::~--------=""-~ncorp Personal Insurances

4 February 2015

The General Manager Adjudication Branch

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Australian Competition and Consumer Commission GPO Box 3131 Canberra ACT 2601

Suncorp Group Ltd ABN 66 145 290 124

Level 33, 530 Collins Street Melbourne VIC 3000

Telephone: (03) 86504416 Email: martin.imosa@suncorp.com.au

Lodged in person at Level 35, The Tower, 360 Elizabeth Street, Melbourne Central

Dear Sir/Madam,

Re: Notification of exclusive dealing - AAI Limited trading as AAMI

Please find enclosed notification of exclusive dealing in relation to AAI Limited's sale of AAMI branded contents insurance policies.

The $100 fee will be paid at the Commission's Melbourne office, over the counter by credit card.

Should you require any further information in relation to this notification, please call me directly on 03 86504416 or email meatmartin.imosa@suncorp.com.au

Yours sincerely,

Martin Imosa Lawyer, Suncorp Group Ltd

1

Form G

Commonwealth of Australia Competition and Consumer Act 2010 -sub-section 93(1)

NOTIFICATION OF EXCLUSIVE DEALING

To the Australian Competition and Consumer Commission:

Notice is hereby given, in accordance with sub-section 93(1 ) of the Competition and

Consumer Act 2010, of particulars of conduct or of proposed conduct of a kind referred to sub­

sections 47 (2), (3), (4), (5), (6), (7), (8) or (9) of that Act in which the person giving notice

engages or proposes to engage.

1. Applicant

(a) Name of person giving notice:

AAI Insurance Limited ABN 48 005 297 807 (AAI) trading as AAMI;

(referred to as "the Insurer").

(b) Short description of business carried on by that person:

General insurance in Australia, including the sale of jewellery insurance as part of domestic contents insurance policies.

AAI operates under Australian Financial Services Licence 230859 and is regulated by

the Australian Securities and Investments Commission and the Australian Prudential

Regulation Authority.

(c) Address in Australia for service of documents on that person:

clo Martin Imesa Lawyer Suncorp Group Level 33 530 Collins Street Melbourne VIC 3000

2. Notified arrangement

(a) Description of the goods or services in relation to the supply or acquisition of which this

notice relates:

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Benefits offered to holders (both current and future) of AAMI contents insurance

policies issued nationally by the Insurer.

(b) Description of the conduct or proposed conduct:

1. Pursuant to the terms of the Insurer's AAMI contents insurance policies

("Policies"), the customer is covered for loss or damage to their insured

jewellery where such loss or damage is caused by an insured event.

2. The conduct subject to this application involves the Insurer providing the

customer with the choice of using:

• a repairer nominated by the Insurer ("Recommended Repairer"), or

• a repairer of the customer's choice,

in the event of such loss or damage to the insured jewellery, with varying

benefits depending on the choice made. This conduct is more particularly

described below:

2.1 in circumstances where the Insurer assesses damaged jewellery as

capable of being repaired, the Insurer will obtain a quote from a

Recommended Repairer (in all such cases).

2.2 where the customer chooses to use the Recommended Repairer, the

Insurer will directly arrange and pay for the repairs and provide a lifetime

guarantee on those repairs .

2.3 where the customer wishes to use their own repairer, they are required

to submit a quote from their repairer and the Insurer will compare it to

the quote provided by the Recommended Repairer. The Insurer will

authorise the more competitive and complete quote and provide a

lifetime guarantee on those authorised repairs which it arranges and

pays directly for (including where the Insurer authorises and arranges

and directly pays for the customer's choice of repairer).

2.4 where the repairer chosen by the customer has not provided the more

competitive and complete quote, and the customer insists on using their

chosen repairer, then the Insurer will cash settle the customer the

amount of repairs quoted by the Recommended Repairer. The Insurer's

Policy enables the insurer to cash settle any claim at the Insurer's

discretion. The customer is then able to arrange and authorise repairs

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with their insurer. The insurer will not provide a lifetime guarantee on

those repairs.

2 .5 A related body corporate of the Insurer has entered into non-exclusive

agreements with various Recommended Repairers. Each agreement

requires the Recommended Repairers to provide warranties on the

standard or repairs they provide.

3. The benefits in using a Recommend Repairer, or the customer's repairer where

authorised by the Insurer, are as follows :

3.1 While the customer is not disadvantaged in terms of their entitlement to

use a repairer of their choice, the customer will receive the benefit of a

lifetime guarantee on those repairs if they use a Recommended

Repairer or the Insurer authorises the repairs quoted by the customer's

choice of repairer.

3.2 In using a Recommended Repairer, the customer will enjoy the

convenience of not having to arrange and manage the repairs.

3.3 If the repairs provided by a Recommended Repairer are faulty or sub­

standard, the Insurer will require the Recommended Repairer to

complete the necessary remedial work, or appoint a different repairer to

complete the necessary work if required at no extra cost to the

customer.

3.4 The Insurer can provide a lifetime guarantee on repairers provided by

the Recommended Repairer because it has control and oversight over

the repair process.

3. Persons, or classes of persons, affected or likely to be affected by the notified

conduct

(a) Class or classes of persons to which the conduct relates:

Customers who hold or may hold in the future AAMI contents insurance from AAI

(trading as AAMI) .

(b) Number of those persons:

(i) At present time: Page 3 of 6

191,088, as at 31 December 2014.

(ii) Estimated within the next year:

No significant changes are expected to the above.

(c) Where number of persons stated in item 3 (b)(i) is less than 50, their names and

addresses:

Not applicable.

4. Public benefit claims

(a) Arguments in support of notification:

In addition to the benefit of a lifetime guarantee where the customer uses a

Recommended Repairer or the Insurer authorises a repairer of the customer's choice,

other benefits are as follows:

• the arrangement is likely to increase competition in the insurance industry, as it

may encourage competitors in this market to offer similar benefit to their

customers;

• the Insurer will make the necessary arrangement with the Recommended

Repairer on behalf of the customer, and the invoice is issued directly to the

Insurer;

• the arrangement also has the potential to foster business efficiency, and

improve product quality.

(b) Facts and evidence relied upon in support of these claims:

None.

5. Market definition

Provide a description of the market(s) in which the goods or services described at (2)(a)

are supplied or acquired and other affected markets including: significant suppliers and

acquirers; substitutes available for the relevant goods or services (for example

geographic or legal restrictions):

The relevant market that may be affected is the market for contents insurance products.

The other market that may be affected is the jewellery repair industry, which we

understand to be a service ordinarily provided by the broader retail jewellery industry.

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The Insurer distributes its contents insurance products directly, by phone and online

sales. These products are available nationally.

Similar contents insurance products can be purchased from a range of competitors to

the Insurer.

The Insurer's market share of home insurance, for the AAMI brand, of the market within

Australia is 11.05%.

Note: the above figure is reflective of both contents and building insurance risks.

Source: Roy Morgan Single Source (Australia), Total Home Insurance, 12 months to

November 2014, base Australians aged over 18. We estimate that the market share of

contents insurance is commensurate with the above figure.

6. Public detriments

(a) Detriments to the public resulting or likely to result from the notification, in parlicular the

likely effect of the notified conduct on the prices of the goods or services described at

2(a) above and the prices of goods or services in other affected markets:

The Insurer is unaware of any detriment to the public that is likely to result from the

notified conduct describe in item 2(a), particularly given that:

• customers are not prevented from obtaining services from a jewellery repairer of

their choice.

• There is no premium discrimination involved in the Insurer's conduct. That is, the

Insurer does not propose to offer a discount on an insurance premium on condition

that the customer will subsequently obtain the services of a Recommended

Repairer in the event of a claim .

• There are a number of substitute insurance products available to potential

customers of the Insurer.

• The cost of the products specific at 2(a) above will not increase as a result of this

arrangement.

• The vast majority of AAMI jewellery insurance claims result in replacement or cash

settlement outcomes, not repair. For example, in the cases of theft or accidental

loss or jewellery.

Given that a relatively small section of the public will be affected by the proposed

arrangement, and the specific nature of the benefit, the affect of this arrangement on

the Australian contents insurance industry is also likely to be small. Consequently, it is

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unlikely that the arrangement would be seen as leading to any meaningful lessening of

competition in that market. It is also likely that the benefits offered to customers under

the arrangement would be seen as more significant than any consequential lessening

of competition in the jewellery repair market.

(b) Facts and evident relevant to these detriments

Attached to this Notification is the AAMI Contents Insurance Product Disclosure

Statement, which contains the terms and conditions of the arrangement, and which

demonstrates that customers will have the option of using their own repairer or a

Recommended Repairer. Refer to pages 48, 53 and 57.

The equivalent repair guarantee policy wording is also found in AAMl's lower cost

contents product, Fire and Theft Contents Insurance. It's Product Disclosure Statement

is available at www.aami.com.au/sites/defaultlfiles/fm/pdf/home-fire-theft-pds.pdf

7. Further information

(a) Name, postal address and contact telephone details of the notifying party authorised to

provide additional information in relation to this notification:

Mr Martin Imosa Lawyer Suncorp Group Level 33, 530 Collins Street Melbourne VIC 3000

Dated 4 February 2015

Signed on behalf of the applicant

.... ... ~~ ...... " .. (Signature)

Martin Imosa (Full name)

AAI Limited (Organisation)

Lawyer

(Position in organisation)

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