Industry funds creating 'inefficient' life insurance market
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The larger industry funds are creating an inefficient life insurance market, according to Australian Prudential Regulation Authority executive John Trowbridge.
In his speech to the Institute of Actuaries in Sydney yesterday, Trowbridge said the larger industry funds are currently creating a "form of indigestion within the life industry".
"Because of the large scale and limited period of [the larger industry funds'] insurance contracts, we now have an inefficient market operating," Trowbridge said. This was evidenced by "many of the larger life insurers not participating in industry fund tenders because of the upheaval that occurs at each renewal, usually every three years", Trowbridge said.
He predicted there would likely be a "restructuring of this market, perhaps along the lines of the coinsurance practices managed by general insurance brokers on behalf of large corporates when they buy their insurances".
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