Another point of contention for investors is the group’s relationship with NIA or health.com.au, the first health insurer to have set up in more than a decade.
NIA has appointed iSelect as a distributor of health.com.au’s private health insurance products. Under the distribution arrangement with health.com.au, iSelect is entitled to receive an upfront fee for each completed sale of a private health insurance product.
iSelect agreed to provide a secured facility, capped at $75 million and expiring on July 2014, to NIA to enable NIA to defer the time of payment of upfront fees that it owes to iSelect for referred sales – in effect helping fund NIA’s entry into the market.
NIA is a customer of iSelect’s but iSelect is in turn a lender to NIA. Effectively, iSelect lends NIA the money NIA then pays iSelect in fees. What is not disclosed is that NIA chief Andy Sheats, a former head of strategy and corporate development at runaway dotcom success REA Group, is the brother-in-law of iSelect chief executive Matt McCann and that Leslie Webb, a director of iSelect, is also a shareholder in NIA.
McCann would not be drawn on this on Thursday, but the company does not believe these relationships need to be disclosed.