Direct life insurance up but credit insurance flat
Overall direct life insurance sales have grown 11.3 per cent in 2011 and in-force annual premiums are up 10.9 per cent despite flat growth in credit-related insurance sales, according to Rice Warner.
Term, income protection and accident insurance business in-force premiums are up 17.4 per cent and have grown more rapidly than traditional adviser-sold and superannuation fund risk insurance in 2011, according to Richard Weatherhead, director and head of life insurance of Rice Warner.
Funeral insurance in-force premiums are also up 15.4 per cent, but credit-related insurance including mortgage and loan insurance and credit card insurance in-force premiums grew only 2.8 per cent.
Growth in credit-related risk insurance has been subdued relative to the 3.0 per cent increase in credit card debt and 7.8 per cent increase in loan and mortgage debt over the year, according to the report.
Weatherhead said a greater awareness of the risks of death and disability across Australia contributed to the growth, and product marketers were becoming smarter at understanding individual client needs and targeting offers accordingly.
"The growth of the funeral insurance segment was a surprise given that this segment has become saturated over the past few years. However, it reflects new entrants to the market and the scale of the major incumbents," he said.
The number of direct life insurance products sold in Australia increased from 109 in 2008 to 203 today, and in the past year 73 new direct insurance products have been launched and 34 have been closed. This demonstrated the high turnover and short lifecycle of some products, with many direct life insurance ventures failing to deliver anticipated business volumes, according to Rice Warner.
Many working Australians also believe the base level of cover in their superannuation is adequate, which combined with affordability means there are still significant challenges for insurers.
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