Life Insurance Participation Drops By Nearly One-Fifth in Five Years

2

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

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.

Published:Friday, 19th Apr 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Understanding the Latest Insurance Regulation Changes for Health Care Professionals

20 Dec 2025: Paige Estritori

Recent updates to insurance regulations have introduced significant changes for health care professionals across Australia. These modifications aim to enhance patient safety and ensure that practitioners maintain adequate coverage to protect against potential liabilities. - read more

How Rising Malpractice Claims Are Influencing Insurance Costs for Health Care Professionals

20 Dec 2025: Paige Estritori

The Australian health care sector is witnessing a notable rise in malpractice claims, a trend that is directly impacting insurance premiums for practitioners. This increase is attributed to several factors, including heightened patient awareness and a more litigious environment. - read more

Ensuring Adequate Insurance Coverage Amidst the Telehealth Boom

20 Dec 2025: Paige Estritori

The rapid expansion of telehealth services in Australia has transformed the delivery of health care, offering patients greater accessibility and convenience. However, this shift also brings new considerations for health care professionals regarding their insurance coverage. - read more

Heightened Road Risks During Holiday Season: Insurers Issue Warnings

19 Dec 2025: Paige Estritori

As the Australian summer school holidays coincide with peak freight activity, insurers and transport specialists are raising concerns about heightened road risks. The surge in freight traffic, coupled with increased holiday travel, amplifies the potential for road incidents, particularly involving heavy vehicles. - read more

Rising Collision Risks Challenge Australian Fleet Operators

19 Dec 2025: Paige Estritori

Australia's transport and haulage sector is currently navigating a period of heightened operational risk, marked by an uptick in both the frequency and severity of motor collision claims. This trend underscores the pressing need for fleet operators to adopt proactive risk management strategies and leverage advanced insurance solutions to safeguard their operations. - read more

Click for more Insurance News