Boots targets pounds 1bn market for insurance
Chemist joins the queue of high street retailers offering financial services with instant health and travel cover
BOOTS the Chemists yesterday launched an assault on Britain's pounds 1bn insurance market with a new range of policies covering health and travel. The initiative is the latest in a series of moves into financial services by Britain's best-known high
street retailers. Marks & Spencer has been offering pensions and loans for years while supermarkets such as Tesco, J Sainsbury and Safeway have launched telephone banking services and other financial products.
But Boots insisted its move into insurance was not a prelude to a "Boots Bank" and that it would not offer private medical insurance.
Steve Russell, managing director of Boots the Chemist, said: "The move is a natural extension of the Boots brand and our overall offer to customers. It takes us into a market which is a natural fit for us and which represents a real commercial opportunity."
Boots is teaming up with Royal & SunAlliance to offer five health insurance policies aimed at family health, pregnancy, dental health, child injury and accident. In addition, there are four travel policies covering single trips or year-round cover as well as a "Gap Year" policy aimed at students working or travelling abroad during their year off between school and university. Royal & Sun will provide the underwriting and claims services and carry the insurance risk.
Boots, led by executive chairman Lord Blyth, aims to demystify the purchase of insurance by keeping its literature and sales methods simple. The policies go on sale in 250 of the largest stores from 15 April. Customers will be able to fill in forms in the stores and pay for cover which takes effect instantly.
The launch will be backed by a pounds 8m marketing budget, including big in-store promotions. Boots hopes to sell 250,000 polices in the first year and 1 million after five. It claims the business will break even in year one. Boots claimed its prices to be highly competitive.
n The dental plan costs pounds 7 a month under the NHS system or pounds 15 per month under a private plan.
n The pregnancy policy cost pounds 95 and enables holders to ring a 24-hour information line to talk to qualified midwives and nurses. There is cash for multiple births and additional stays in hospital.
n In travel insurance, an annual policy for a family is priced at pounds 89 for a single person and pounds 140 for a family.
Boots said its research on customers' shopping habits showed that after Christmas a high proportion were seeking travel-related products such as sun tan lotion and sunglasses.
Analysts welcomed the move saying it was a logical way for Boots to leverage its brand in the health and travel markets. "There is a logical link between selling tanning lotion and travel insurance," said John Richards at NatWest Securities. "If you
have a brand with enormous loyalty then you have the opportunity to cross-sell other products."
Ashley Thomas at SG Securities agreed that it was a positive move but warned that Boots should not stretch itself too far. "They obviously have to be careful not to dilute the brand so they don't stretch it too much. I wouldn't want Boots to suddenly go into estate agency or travel."
Another analysts said the move could be good news for consumers who have been angered by travel agents which insist on the purchase of insurance from them when booking holidays. Many consumers have feared they were not being offered the best deal.
Boots' policies will include a 30-day cooling off period and accrue points on the stores' Advantage loyalty card, which was launched last year. Boots shares rose 12.5p to 918p.
Additional reporting by Kerry Benefield
Off-the-shelf financial services
Tesco Banking and pensions
Sainsbury Banking
M&S Pensions, investments and insurance
Safeway Banking
Kwiksave Car insurance
Budgens Credit card
Boots Travel, health and accident insurance
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