Australia Insurance Report Q3 2016 - New Market Report

We continue to hold a broadly positive outlook for Australia's large and mature insurance market. Demographic trends, including an ageing and expanding population, will continue to drive growth in demand for various life insurance products, including traditional life cover and later - in - life savings products , particularly through the development of superannuation funds. In the non-life sector, increases in household income levels will stimulate growth, despite fierce competition amongst the many non-life providers. Health, motor and property will remain the key non-life sub-sectors, though we also expect to see growth in smaller lines, such as credit and financial guarantee insurance, reflecting the diversity of this well established market.

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Key Updates And Forecasts

Premiums in the private health insurance segment are expected to rise by an average of 5.59% from 1 April 2016 following intervention from the Ministry of Health requiring insurers to lower rates increases or justify the rise. The health insurance sector is under scrutiny as the government attempts to overhaul the sector, with consumer advocacy group Choice recently criticising a number of health insurers for providing 'junk' products.

Demonstrating Australia's vulnerability to the costs of natural disasters, the Insurance Council of Australia recently reported that the cost of damage from three bushfires and a tornado over the summer will together cost insurance agencies over AUD550mn which will likely translate to premium increases over the next year.

At present we are broadly maintaining our current forecasts for annual average growth in premiums in the non-life sector of 4.5% between 2016 and 2020 (in local currency terms) with premiums increasing from AUD67.7bn to AUD80.5bn.

Slower growth will be seen in the life sector, where we are forecasting annual average premium growth of 2.3% over the forecast period, indicating life insurance premiums written will increase from AUD65.2bn in 2016 to AUD71.2bn in 2020.

The Australia Insurance Report has been researched at source and features BMI Research's independent assessment and forecasts for the insurance sector. It examines industry developments, key growth drivers and risk management projections, including the macroeconomic situation, government policy, regulatory environment and the level of development and potential for growth, broken down by line. Leading insurers are profiled, covering premiums, products and services and competitive positioning.

BMI's Australia Insurance Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Australian insurance industry.

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