The adverse results of the COVID-19 outbreak lead to a surge in health, travel and business interuption claims. It also caused pressure on sales due to reduced business activity and less use of face to face channels. The gathering economic slowdown due to the pandemic caused the interest rates to drop lower and incresed credit risk exposure for businesses facing possible default.
Australia's insurance market can roughly be divided into three segments: general insurance, health insurance and life insurance. These markets are fairly distinct and most larger insurers focus on only one particular segemnt. However, in recent times many of these companies have brodened thier services. These companies face competetion from the banks and subsidaries of foreign financial conglomertes. Australian general insurance companies have enjoyed attractive growth and profitability over a long period. This growth has been sustained by underlying macro-economic tailwinds and growing awareness of risk among Australian consumers and businesses. The general insurance industry in Australia has been most profitable in world for nearly 20 years.
However, the Australian insurance industry has faced a slow down in growth in the past five years. Annual market volume growth has been flat at 1.6% and the 75% premium growth was driven by price increases. Competition has been intensified and the major player have experienced a loss of 6% market share. They are experiencing more than 50% decline in profitability. Cost growth at 6% has outpaced the premium growth of 4%.
Motor vehicle and household insurance make up the largest shares respectively in Australia's general insurance segment. Compulsory Third Party (CTP) insurance in Australia is required for all legally registered cars. Additionally, many car owners take out comprehensive car insurance to reduce out-of-pocket expenses if they are involved in an accident. The gross loss ratio of CTP motor vehicle insurance has increased significantly in 2020, largely due to a decline in gross written premiums. Extended lockdown periods have also led to many people having work from home in Australia. Insurers have had to react retrospectively in many cases, as household insurance policies do not usually cover working from home.
Aside from changes in insurance trends relating to pandemic, catastrophe insurance is becoming more relevant. Insurance losses from major weather events, such as bushfires, storms, and floods, have already led to an increase in claims in recent years. This negative impact on general insurers’ underwriting margins and earnings will likely continue as natural disasters become more commonplace in the country. Policyholders may expect to pay higher premiums as insurers try to compensate for these losses and secure their financial performance for the future.
Australia Life and Non-Life Insurance Market is moderatly consolidated in nature. Some of the major players operating in the industry are currently dominating the market. However, with technological advancement and product innovation, mid-size to smaller companies is increasing their market presence by securing new contracts and by tapping new markets.
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Australia's insurance market can roughly be divided into three segments: general insurance, health insurance and life insurance. These markets are fairly distinct and most larger insurers focus on only one particular segemnt. However, in recent times many of these companies have brodened thier services. These companies face competetion from the banks and subsidaries of foreign financial conglomertes. Australian general insurance companies have enjoyed attractive growth and profitability over a long period. This growth has been sustained by underlying macro-economic tailwinds and growing awareness of risk among Australian consumers and businesses. The general insurance industry in Australia has been most profitable in world for nearly 20 years.
However, the Australian insurance industry has faced a slow down in growth in the past five years. Annual market volume growth has been flat at 1.6% and the 75% premium growth was driven by price increases. Competition has been intensified and the major player have experienced a loss of 6% market share. They are experiencing more than 50% decline in profitability. Cost growth at 6% has outpaced the premium growth of 4%.
Key Market Trends
Motor Vehicle and Household Insurance has the Largest Shares
Motor vehicle and household insurance make up the largest shares respectively in Australia's general insurance segment. Compulsory Third Party (CTP) insurance in Australia is required for all legally registered cars. Additionally, many car owners take out comprehensive car insurance to reduce out-of-pocket expenses if they are involved in an accident. The gross loss ratio of CTP motor vehicle insurance has increased significantly in 2020, largely due to a decline in gross written premiums. Extended lockdown periods have also led to many people having work from home in Australia. Insurers have had to react retrospectively in many cases, as household insurance policies do not usually cover working from home.
Catastrophe Insurance is in High Demand
Aside from changes in insurance trends relating to pandemic, catastrophe insurance is becoming more relevant. Insurance losses from major weather events, such as bushfires, storms, and floods, have already led to an increase in claims in recent years. This negative impact on general insurers’ underwriting margins and earnings will likely continue as natural disasters become more commonplace in the country. Policyholders may expect to pay higher premiums as insurers try to compensate for these losses and secure their financial performance for the future.
Competitive Landscape
Australia Life and Non-Life Insurance Market is moderatly consolidated in nature. Some of the major players operating in the industry are currently dominating the market. However, with technological advancement and product innovation, mid-size to smaller companies is increasing their market presence by securing new contracts and by tapping new markets.
Additional Benefits:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
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Table of Contents
1 INTRODUCTION
4 MARKET DYNAMICS AND INSIGHTS
5 MARKET SEGMENTATION
6 COMPETITIVE LANDSCAPE
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Insurance Australia Group Limited
- Suncorp Group
- AIA Group Limited
- Zurich
- Medibank Private Limited
- Genworth Mortgage Insurance Australia Limited
- ClearView Wealth Limited
- Cover-More Limited
- AMP Limited
- NIB Holdings Limited*
Methodology
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