The term life insurance market has taken a nosedive following meteoric growth in the mid 1990s.
According to the latest Rice Kachor Research market share report, the term life policies market shrank 17 per cent to $300 million in the year to September 1998, the second year in succession the market has taken a dive.
However, Rice Kachor director Michael Kachor points out the falls follow a big rise in the year to September 1996, when the market grew by 72 per cent to $396 million.
Kachor sa
The term life insurance market has taken a nosedive following meteoric growth in the mid 1990s.
According to the latest Rice Kachor Research market share report, the term life policies market shrank 17 per cent to $300 million in the year to September 1998, the second year in succession the market has taken a dive.
However, Rice Kachor director Michael Kachor points out the falls follow a big rise in the year to September 1996, when the market grew by 72 per cent to $396 million.
Kachor says the rise in the year to September 1996 was driven largely by attrac-tive commissions offered to agents and brokers by a number of the big players in the market.
While the term life market may be on a downturn, the disability insurance market continues to grow, up 16 per cent in the past year to $188 million, according to the research.
However, disability insurance is one of the few bright spots in an otherwise dull annual premiums market which fell 3.3 per cent to $6.9 billion in the year to September 1996.
Sales of new annual premium products fell more than 18 per cent to $1.7 billion in the year as some of the biggest players in the market recorded big falls. New sales from market leader Mercantile Mutual dropped 34 per cent to $237 million while new sales from former market leader AMP Life fell 74 per cent to $146 mil-lion.
But all is not doom and gloom, according to Kachor, who points out much of the falls in annual premiums merely reflect a change in the way life companies de-velop their products. By far the biggest market for life companies, single pre-mium products rose more than 21 per cent $24.4 billion in the year to September.
Single premium products is roughly divided up between superannuation products and retirement income products. Superannuation premium products were up 21 per cent to $18.3 billion while immediate and allocated annuities rose 18 per cent to $5.2 billion.
The much vaunted September 20 changes to the assets test by Centrelink made only a marginal dent in sales of immediate annuities, which fell 17 per cent to $2.1 billion. The September 20 changes are expected to see long term annuities domi-nate short-term annuities in the next few years.
Kachor says the report is based on the market to the end of September and any movement towards allocated annuities shouldn’t be noticeable until the next quarter’s figures are available but a rise is allocated annuities is likely.
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