AA not worried about roadside rival

By WAYNE THOMPSON

The Automobile Association says it is not worried about State Insurance launching a rival roadside breakdown service for its vehicle policyholders.

"We are a motoring club that offers all sorts of services that make a subscription value for money," said chief executive Brian Gibbons.

AA membership was growing despite car companies General Motors, Ford and BMW offering a free breakdown service as part of their warranty schemes.

But State executives say its national Roadside Rescue is competing "head to head" with the venerable knight of the road.

State is adding a product to retain its customers. But it is also pitching for those among the association's 853,000 members who called for help at 435,000 breakdowns this year and, especially, those who did not.

Roadside Rescue is being offered to 400,000 of State's standard car insurance policy holders for an extra $12 a year, compared with AA's $120 joining fee for stranded motorists to get help from AA patrols.

Normally, Auckland members pay a yearly subscription of $66, or a $54 subscription outside of Auckland. Points earned in fuel purchases through the AA Rewards card scheme can be used as a discount on membership fees.

Cost was not the only competitive element, said the group chief executive of State Insurance, Tim Sole.

Under State's scheme, he said, it was the car that was covered for breakdown help; under the AA rules, it was the member who had cover.

State limited calls to two a year "to make people think twice" before seeking help. For people who made one callout, the next year's charge rose to $26 and two callouts increased the annual charge to $40. Additional callouts cost $50.

Mr Gibbons said the AA's annual limit was six callouts. It charged $35 for additional callouts in a year, and had no limits for 10-year members.

He doubted whether State could keep the charge to $12 a year. The AA service cost $20 million a year, including administration, out of total subscriptions of $31 million.

Mr Sole said State was not subsidising the service apart from the three months' free introductory offer. He believed the $12-a-year fee could survive because administration costs would be minimal.