The Australian life insurance industry could grow by up to AU$40b in annual premiums, or to more than three times its current size of about $18b, by addressing the under-served and underinsured segments of the market, such as the middle-income segment, a report from Deloitte estimates.
The firm’s report Mind the gap: How to provide the Australian community with the life insurance it needs also highlights that Australian families could have claimed $25b more for life insurance events last year were it not for underinsurance.
The report states that over the past few years, the Australian life insurance risk industry has not managed to achieve growth in both nominal and real terms and profits have been impacted by unexpectedly higher claim costs, leading to both top-and bottom-line challenges for the industry.
The firm says that with this poor growth, the Australian public is up to 60%-80% underinsured, which “… presents a compelling opportunity for life insurers to fill this social need.”
The 33-page report says there are opportunities “…to reach and better serve [the] middle market (which captures an increasing proportion of millennials) plus older Australians nearing retirement, through innovation in product, channel, network and engagement”.
It says each individual insurer “…should seize the opportunity to grow the market and in doing so to outgrow their competitors as befits the competitive marketplace”.
…truly meeting the broad community needs would however require concerted efforts from all participants within the value chain…
It also concludes that truly meeting the broad community needs would however require concerted efforts from all participants within the value chain – life insurers/reinsurers, CALI, regulators, distributors, financial advisers, ratings agencies, and Government.
Deloitte says that life insurers have the opportunity to unlock growth and margin expansion by adopting an innovative approach and mindset to generate undisputed value for their customers.
“Success can be achieved by insurers taking a system-wide view and placing the social good agenda alongside their own growth ambitions.”
