Five years ago, he helped the Hollard Insurance Group, a South African insurer, launch Real Insurance in Australia because, like the other new players, he could see there was enormous potential for growth.
For years, two companies have dominated the general insurance market -- Suncorp and Insurance Australia Group -- but in recent years there has been a proliferation of smaller, mainly online businesses.
Companies such as Budget Direct, Virgin Car Insurance, Youi, Progressive Direct and Real Insurance have emerged offering consumers cheaper prices and, in some cases, innovative ways to buy and use car insurance.
The bigger players say while they view any competition seriously, the new insurers are still very small and are only operating on the fringes.
At the moment, that is true -- Real Insurance's 200,000-strong customer base seems light when compared with IAG, which owns NRMA Insurance, CGU, SGIO, SGIC and Swann Insurance.
But as Virgin Money Australia managing director Matt Baxby points out, "Virgin never enters a market thinking it is not going to make an impact and companies like Progressive wouldn't be making large investments in the country unless they thought there was a real opportunity".
Mr Grobler says, in the long term, the new players "pose a huge threat for a few reasons".
"One is consumer behaviour is moving quite rapidly on to the internet and I think the new players are a lot stronger in terms of putting competing propositions on to the internet," he says.
Mr Baxby says online car insurance sales represent 5 per cent of the total market in Australia whereas in Britain it accounts for 40 per cent, so there is big potential for growth.
In response, Suncorp has launched Bingle Insurance and IAG has created The Buzz -- their takes on the cheaper, online insurer.
Mr Grobler is also confident that Real Insurance, which also sells life insurance, will attract a lot of new business with its "pay as you drive" policy -- a first in the Australian market where consumers only pay car insurance for the kilometres they intend to travel.
"It's a very difficult thing for (the major players) to do because they have these massive books of business that are very finely balanced and if they introduce a pay as you drive pricing mechanism into those books what is going to happen in the short term is that the people who drive a lot are going to get much higher premiums and they are going to lose them (as customers)," he says.
But the main differentiator that most of the new players are focusing on is price.
By selling their products online, insurers are able to strip away a lot of their overheads, such as call centres and retail outlets, and pass on the savings to their customers.
Mr Baxby claims Virgin Car Insurance, sold online, is 35 per cent cheaper than the average policy price of AAMI, GIO, NRMA and QBE.
However, KPMG head of insurance Brian Greig says while increased competition can be a driver of premium movements, it is not the only driver.
"Risk ratings and claims costs factor heavily in premium pricing decisions," he says.
QBE Australia chief executive Terry Ibbotson has reportedly warned consumers the new entrants may be forced to correct their pricing because, in a rising claims environment, lower prices are not sustainable.
Mr Grobler still thinks the major players have had a "massive free ride" and is prepared to challenge them.
Source:
Australian.com.au