Life Insurance Participation Drops By Nearly One-Fifth in Five Years
Life Insurance Participation Drops By Nearly One-Fifth in Five Years
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Last year, research from a major insurance provider signaled a significant shift in the life insurance landscape within Australia, showing a marked decrease in the percentage of insured non-dependent adults of working age.
Only 77% now carry some form of life insurance, a stark contrast to the 94% coverage rate recorded in 2017.
Industries evolve, yet the dip in these figures marks a noteworthy trend within the life insurance sector.
This downward trend is believed to be partially due to legislative changes, specifically citing the Protecting Your Super package, which significantly reduced the instances of automatic coverage in certain superannuation accounts. These regulations were aimed at safeguarding the super funds of Australians from unnecessary erosion due to fees and insurance premiums, particularly in cases of low balance and inactive super accounts.
Data gleaned from industry body Council of Australian Life Insurers (CALI) shines a light on the residual under-insurance issue, suggesting that approximately 3.4 million citizens fail to maintain adequate income protection coverage for basic livelihood necessities, suggesting an undercurrent of financial vulnerability in the populace.
The landscape of the life insurance sector has also undergone significant consolidation in recent years. The current market comprises 24 life insurers, seven of which are onshore reinsurers, and 10 friendly societies. This is a reduction from the 29 insurers and 12 friendly societies active in 2018, leading to a more concentrated market environment.
Although the industry has faced challenges, there have been positive shifts making the market more appealing for insurers and insureds alike. The Australian Prudential Regulation Authority (APRA) instigated crucial capital modifications, changes were implemented regarding income protection products, and a substantial surge in the price of current income protection products was observed. Adding to this landscape, there was noteworthy industry data suggesting stabilization in the migration away from financial advisement as adviser numbers began to level out.
Encouragingly, due to industry adaptation and increased adviser productivity, there has been an upswing in new business acquisitions over three consecutive quarters. This rejuvenation brings renewed optimism as what some are calling an "inflection point", hinting at a trajectory of growth and recovery for the life insurance market moving forward.
As financial landscapes evolve, the coming years will be critical in assessing whether these trends will continue to affect the levels of life and income protection insurance coverage across Australia, and whether current industry adaptations will suffice to close the gap in under-insurance among Australians.
Recent data indicates a notable decline in life and income protection insurance premiums across Australia, providing consumers with more affordable coverage options. According to the latest Direct Life Insurance Report from Rainmaker Information, direct life premiums have decreased by 7% since 2024. Similarly, direct income protection premiums have seen significant reductions, with average premiums for waiting periods of 30 days and 90 days decreasing by 12% and 13%, respectively. - read more
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In a significant move within the Australian insurance sector, Allianz Australia has successfully completed the acquisition of RAA Insurance for $642 million. This strategic acquisition, approved by the competition regulator on June 12, 2025, marks a substantial expansion of Allianz's footprint in the South Australian market. - read more
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Life insurance is a cornerstone of financial planning, offering peace of mind to you and security for your loved ones. It's a contract between you and an insurance company: in exchange for regular premiums, the insurer agrees to pay a sum of money to designated beneficiaries upon your passing. This vital tool ensures that your family's financial needs can be met during an incredibly difficult time. - read more
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When it comes to life insurance, a pre-existing condition refers to any medical condition or illness that you have been diagnosed with before applying for a life insurance policy. - read more
For many millennials, navigating the complexities of personal finance and future planning can feel like a bewildering journey. Among these financial responsibilities, life insurance emerges as a paramount consideration. More than just a safety net, life insurance can be the cornerstone of a sound financial strategy, providing peace of mind for both the policyholder and their loved ones. - read more
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Knowledgebase
Grace Period: A set amount of time after the premium is due during which a policyholder can make a payment without the insurance coverage lapsing.
