Australian general insurance industry to hit huge figure by 2027 – report
Australian general insurance industry to hit huge figure by 2027 – report | Insurance Business Australia
Insurance News
Australian general insurance industry to hit huge figure by 2027 – report
Leading lines of business revealed
Insurance News
By
Roxanne Libatique
The Australian general insurance industry is expected to jump from AU$86.8 billion in 2023 to a whopping AU$123.1 billion by 2027, a compound annual growth rate of (CAGR) 9.1%, according to data and analytics company GlobalData’s Insurance Database.
The report suggests the Australian insurance industry will see an annual growth of 9.5% in 2023 and 9.8% in 2024, thanks to increased healthcare awareness post-COVID-19 pandemic, red-hot demand for natural catastrophe insurance due to climate change, and rising property and motor insurance premiums.
“The Australian general insurance industry has witnessed an upward growth trend since the slowdown in 2020 and grew by 8.1% in 2022, recording the highest growth during the last five years. The increase in healthcare awareness post pandemic and a rise in vehicle sales have supported the growth of general insurance,” said Sutirtha Dutta, insurance analyst at GlobalData.
Leading lines of business
GlobalData’s report identified personal accident and health insurance as the leading lines of business in the Australian general insurance industry, accounting for a 34.8% share of premiums in 2023.
Personal accident and health insurance’s large share of premiums resulted from increased healthcare awareness post-pandemic that led to a rise in private health insurance membership, having seen growth for 10 consecutive quarters since June 2020. According to Private Healthcare Australia (PHA), private health insurance membership grew by 2% in 2022, with around 55% of Australians having private health insurance.
“The increasing cost of healthcare due to rising inflation will also support the growth of PA&H insurance. The consumer price index (CPI) inflation in Australia reached 5.2% in August 2023. Rising healthcare costs, which are expected to put an additional burden on uninsured consumers, will support demand for private health insurance. PA&H insurance is expected to grow at a CAGR of 6.0% during 2023-2027,” Dutta said.
The report identified motor insurance as the second leading line of business in the Australian general insurance industry this year, accounting for 24.8% share of general insurance DWP.
Moving forward, the report expects motor insurance to grow at a CAGR of 10.3% during 2023-27 due to a rise in vehicle sales, with the Federal Chamber of Automotive Industries (FCAI) revealing that new vehicle sales increased by 10% from January to August 2023 as compared to the same period in 2022.
Property insurance is the third-largest line of business in the Australian general insurance industry this year, accounting for a 24.4% share of the general insurance DWP. It is expected to grow at a CAGR of 13.6% during 2023-27.
“The rise in premiums that will escalate the cost-of-living and make people selective while taking insurance is not expected to have a significant negative impact on the growth of the Australian general insurance industry during 2023-27. However, escalating nat-cat losses and rising inflation will remain a key challenge for the profitability of Australian general insurers,” Dutta said.
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