News Life and Health30 Aug 2018

Australia:Insurance market increasingly dominated by foreign owners

| 30 Aug 2018

The changing structure of the insurance industry in Australia, following a wave of M&A activity, has seen increased ownership of Australian insurers by foreign-controlled companies and a reduction in market share held by the largest insurers in the market.

In 2017, 47.8% of market share was from foreign-controlled companies, up from 41.4% in 2014. This is driven largely by the sale of 80% of MLC Life Insurance to Nippon Life Japan. Once CommInsure (sold to Hong Kong-incorporated AIA) and OnePath Life (sold to Zurich Insurance) are considered foreign-controlled companies, then the total market share owned by foreign-controlled companies will rise to 66%, says KPMG in its Life Insurance Insights report.

In 2017, the top three insurers (AMP/ AXA, TAL and Challenger) held 32.4% of total market share, down from 35.1% in 2014 (AMP/AXA, MLC and CommInsure).

The continued introduction of global insurance specialists in Australia is expected to drive greater innovation and efficiency in the sector, applying increased pressure to long-standing domestic players.

Challenger, TAL, Metlife, Swiss Re and AIA have led the growth in insurance premiums over the past four years, with Challenger being the only domestically-owned insurer amongst this list, and positioned successfully as the retirement income specialist. This contrasts with the leading, domestically owned life insurers – AMP/AXA, CommInsure, OnePath and Westpac/St George which have lost market share relative to their international competitors over the same period.

Channel mix

From an operating model perspective, the current wave of M&A activity is expected to change the distribution channel mix. The dismantling of vertically integrated models, with less product delivery through aligned dealerships, will result in greater distribution being provided by independent advisory groups. Strategic long term bancassurance alliances are aimed at improving the performance of the bancassurance channel, the report says. 

New products

As global competitors become entrenched in the Australian insurance market, new international products are expected to be released to Australian customers. There will likely be increased pressure on domestic operators in product innovation and the speed-to-market of new products. As global insurance specialists invest more heavily in technology and subsequently introduce more innovative product offerings, domestic operators will be forced to innovate in order to optimise their current service offerings and systems, and maintain market share.

New and innovative digital channels and product lines can be expected to address new customer segments, driving longer term growth in the market.


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