Sun Alliance to sell wares at post offices

Sun Alliance, Britain's largest commercial insurer, is linking up with the Post Office to sell life and general insurance at Post Office Counters. This step in the PO's strategy to develop new business areas came just a day after the launch of a pilot scheme selling travel insurance at 100 post offices.

Post Office Counters, the retail arm, said the aim of the cooperation with Sun Alliance is to enable it to become a leading player in the UK general and life insurance market.

The two groups are concluding detailed market analysis about what products will sell best, and expect to have a couple of products on trial by the end of the year.

"With our network of 20,000 post offices throughout the country, we are in a unique position, with a very strong competitive advantage in distribution," said a Post Office spokeswoman.

As competition rages fast and furious among the big insurance players, and the life insurance industry suffers from a generally poor image at the moment, the winning of the PO's business is regarded as something of a coup for Sun Alliance. "It is not as if there is a lack of distribution in Britain, but the important thing here is that Post Office channels could be cheaper, offering a winning edge," said Stephen Dias of Goldman Sachs.

But yesterday's announcement prompted concern at the Consumers Association, already worried at the PO's move into financial services. "We have been concerned about the quality of post office counter service, and in particular the quality of advice they give. The more complex the service, the less able the staff have been to handle it," said Stephen Locke, director of policy at the Consumer Association.

Sun Alliance said that if its market research encourages it to offer life insurance products that entail giving advice, then "these people will have to be properly trained and all requirements of the Financial Services Act will be complied with".

Yesterday's move is the most significant so far in the Post Office's efforts to diversify its business, now that the Government has shelved plans for its privatisation.

The liberalisation began last year when Post Office Counters Ltd, which runs Post Office outlets, was given wider powers by the Government to take on other business.

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