Business Monitor International


Australia Insurance Report

Published 20 November 2013

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Australia Insurance Report

BMI View: As was the case in our 2012 and 2013 Annual Reports, it is the strengths of Australia's insurance sector that stand out. In most countries, wealth management is an ancilliary activity that is undertaken by life insurers or commercial banks. In Australia, the development over nearly 30 years of the superannuation (pension) fund industry means that wealth management is a core business. Moreover, the superannuation funds, with their roughly AUD1,500bn in assets under management (AUM) continue to grow. They are fed in part by contributions from employers on behalf of employees that are determined by the Superannuation Guarantee (SG) Levy rate. Currently 9% of employees' income, this will rise to 12% by mid-2019.

In the short-term, though, the insurers are responding to a number of changes that have been imposed by the regulator and the Treasury. APRA's Life and General Insurance Capital framework became effective from the beginning of 2013. Broadly analogous to Solvency II in Europe, it has required all insurers to implement some operational changes. However, both the non-life and the life companies are well capitalised and will be able to cope. For the life insurers, the Stronger Super and the Future of Financial Advice (FoFA) reforms will intensify the downwards pressure on fees and prices. However, over the longer term, they will probably improve the perceptions of the insurance/ wealth management industry in Australia of consumers/investors.

In the recent past, the leading life insurers have been consolidating already strong market positions by exploiting brands or making acquisitions that reinforce their offerings in particular, usually quite rapidly growing areas. Foreign life groups are competing in Australia, but are tending to focus on niches where brand and (established, multiple) distribution channels are less important.

Almost all the non-life companies, which are generally world-class in terms of scale and sophistication, have been able to...

Table of Contents

Executive Summary
5
Table: Australia-s Total Premiums, 2010-2017
5
Key Insights And Key Risks
5
SWOT Analysis
7
Australia Insurance Industry SWOT
7
Australia Political SWOT
9
Australia Economic SWOT
10
Australia Business Environment SWOT
11
Life Sector Overview
12
Asia-Pacific Life Sector Overview
12
Table: Asia Pacific Life Premiums, 2010-2017 (US$mn)
12
Australia Life Sector Update
14
Table: Australia Life Segment - Financial Years Ending in 12 Months, 2011 (AUDmn)
14
Life Industry Forecast Scenario
17
Table: Total Life Premiums, 2010-2017
17
Growth Drivers And Risk Management Projections
18
Population
18
Table: Insurance Key Drivers - Demographics, 2010-2017
18
Non-Life Sector Overview
20
Asia-Pacific Non-Life Sector Overview
20
Table: Asia Pacific-s Non-Life Premiums, 2010-2017 (US$mn)
20
Australia Non-Life Sector Update
22
Non- Life Industry Forecast Scenario
24
Table: Total Non-Life Premiums, 2010-2017
24
Growth Drivers And Risk Management Projections
25
Macroeconomic Outlook
25
Table: Australia - Economic Activity, 2011-2016
28
Political Stability Outlook
29
Table: Asia Pacific Regional Security Ratings
31
Epidemiology
31
Table: Insurance Key Drivers, Disease Adjusted Life Years, 2010-2017
32
Motor
34
Insurance Risk/Reward Ratings
35
Table: Australia-s Insurance Risk/Reward Ratings
35
Table: Asia Pacific Insurance Risk/Reward Ratings
36
Competitive Landscape
37
Major Players In Australia-s Insurance Sector
37
Company Profiles
40
AIA Group
40
AIG
45
Allianz
49
AMP Limited
52
Comminsure/CFSGAM
55
Insurance Australia Group Limited
58
MetLife
61
QBE Insurance Group
64
Suncorp Group Limited
67
Zurich Insurance Group
70
Demographic Outlook
73
Table: Australia's Population By Age Group, 1990-2020 ('000)
74
Table: Australia's Population By Age Group, 1990-2020 (% of total)
75
Table: Australia's Key Population Ratios, 1990-2020
76
Table: Australia's Rural And Urban Population, 1990-2020
76
BMI Methodology
77
Insurance Risk/Reward Ratings
79
Table: Insurance Risk/Reward Indicators And Rationale
80
Table: Weighting Of Indicators
81

The Australia Insurance Report has been researched at source and features Business Monitor International (BMI)'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.

Key Benefits

  • Benchmark BMI's independent insurance industry forecasts for Australia to test other views - a key input for successful budgeting and strategic business planning in Australia's insurance market.
  • Target business opportunities and risks in Australia through our reviews of latest industry trends, regulatory changes and major deals, investments and macroeconomic developments.
  • Exploit latest competitive intelligence on your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

BMI Industry View

Summary of BMI's key industry forecasts and views, covering the Life and Non-Life segments, the evolving competitive landscape and business operational risks.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the insurance sector and within the broader political, economic and business environment.

Regional Outlook

Individual analysis of both Life and Non-Life insurance sector developments and prospects across developed states and emerging markets - supported by BMI's global industry growth forecasts. This is followed by an in-depth evaluation of region- and country-specific trends, focusing on BMI's country-by-country market growth data.

Business Environment Rankings

BMI's Insurance Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (Life and Non-Life) in the insurance market.

The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points and is part of BMI's integrated Country Risk-Industry Rankings products.

BMI Industry Forecasts

Historic data series (2008-2012) and forecasts to end-2018 for key industry and economic indicators (see list below) supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

Premiums: Total (US$mn), growth (% y-o-y), penetration (% of GDP), density (US$ per capita) for Life and Non-Life sectors, and total premiums.

Life: Data on gross written premiums for all major non-life segments (e.g. motor, fire, work).

Non-life: Data on gross written premiums for all major life segments (e.g. life, retirement).

Economic: Nominal GDP (US$bn), real GDP growth (%), GDP per capita (US$), population (mn), unemployment (%), exchange rate (against US$).

Competitive Landscape & Rankings

Illustration of the insurance industry via rankings tables comparing gross written premiums by company (US$mn) and market share (%). This chapter also includes in-depth regional analysis of the market position, business strategies and investment potential of the leading insurance companies.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc