UK Internet and telephone bank Intelligent Finance may add insurance to its product range.
Intelligent Finance (IF) currently offers a number of general insurance products to customers who have already applied for a mortgage, credit card or personal loan. The introduction of insurance on a standalone basis would mark a shift from its core area of expertise and would move IF alongside the ranks of banks and building societies already offering insurance to their customers.
IF has not confirmed what products it plans to launch, though it is likely that motor, household and travel insurance would be included in its portfolio. The bank currently offers mortgage payment protection insurance for credit card, mortgage and loan customers through Pinnacle, and building and contents insurance through various HBOS subsidiaries.
The key stumbling block would be gaining authorization from the Financial Services Authority (FSA), which is taking over the regulation of general insurance in January 2005. The FSA is likely to impose stringent requirements on third-party insurance providers when its regulatory regime begins and IF will need to ensure it is fully compliant, likely to be a lengthy and costly process.
The extension of its current structure forms an integral part of IF’s growth strategy. In April the company said it was keen on expanding overseas but the current uncertain global economic situation is delaying the implementation of these plans. A move into new territories allied with the introduction of insurance products would mark a significant change to the UK-focused business model that has served IF so well since it began trading in 2000.
Thanks to HBOS, IF has the tools at its disposal to make a strong impact on the general insurance market. HBOS has the requisite expertise in underwriting and marketing to create a strong brand proposition once IF comes to market.
The provision of insurance by banks, known as bancassurance, has been a growing trend in recent years and, despite the support it will receive from HBOS, IF may find it hard to make inroads without a compelling proposition.
