Asda’s re-launched pet insurance product means that its insurance offerings now equal those of its main rivals. Although motor insurance has been the key area of insurance growth for retailers, pet insurance offers real opportunities, particularly given the success of Tesco in this market.


Since the re-launch of Asda Financial Services, following the Wal-Mart acquisition, Allianz has become the second major insurer to sign a deal to provide insurance products for Asda’s customers. The trial follows the launch of Asda branded motor, home and travel insurance policies underwritten by Norwich Union and will be rolled out to 40 stores in the UK.


Asda has been making giant strides as a supermarket group in recent years. It recently overtook Sainsbury’s to become the second-largest supermarket by market share after Tesco. Asda is keen to follow the successful footsteps of its competitors into financial services provision. The re-launch of pet insurance in Asda’s product portfolio will see the company equal the insurance product offerings of Tesco and Sainsbury’s (with the exception of Tesco’s breakdown cover).


The rise of supermarkets and retail brands in the distribution of general insurance products is well documented. Retail brands have access to large and loyal customer bases with frequent opportunities to market additional products. If insurance products are correctly marketed, this can lead to high volumes of sales for the retail brand. Motor insurance has been a key success area for such brands largely due to the widespread need for the product and its commoditised nature.


Pet insurance on the other hand has traditionally been sold through veterinary practices, and penetration among cat and dog owners has been very low. However, in recent years, programs such as Animal Hospital and advertising campaigns by companies such as Direct Line and More Th>n have served to raise consumer awareness both of the benefits of pet insurance, and of the alternative distribution channels open to customers.


Tesco has made a success of its pet insurance offering and since its launch has grown to have a market share of more than 10% in 2002. Asda hopes to follow this success, as the pet insurance market is set for strong growth in the next few years. However, Asda and Tesco have very different relationships with their insurance partners, so Asda won’t necessarily be able to emulate Tesco’s success.


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