The Commonwealth Bank is offloading its general insurance business to the Hollard Group, which will then sell home and vehicle insurance to CBA customers.
Hollard will pay $625 million for CommInsure General Insurance, and then pitch products to CBA customers through channels such as the CommBank app.
Hollard and the bank have forged a 15-year pact on the selling of insurance products.
The bank’s group executive retail banking services Angus Sullivan said the alliance would combine the app, the bank’s branch network and Hollard’s products.
The bank has been trying to offer more services to customers, particularly through digital channels.
In May, the Commonwealth bought stakes in online shopping group Little Birdie and power retailer Amber as it tries to keep pace with online-only rivals such as Afterpay.
Hollard, in addition to the upfront payment, may also make deferred payments to the bank should insurance sales meet targets.
The bank will continue to receive income from the sale of insurance products.
The sale of the business is expected to be completed mid-2022.
Shares were lower by 4.53 per cent to $98.99 at 1152 AEST amid a wider market downturn.