Australian life insurers sink as slump hits sector

Recovery will be a measly 0.2% in 2021.

The adverse outlook for the Australian economy will hit the country’s life insurers as total gross written premiums (GWPs) are expected to sink 2.2% this year, according to a GlobalData report.

It will bounce back to a measly 0.2% come 2021, a far cry from the previous 5.1%. The growth rate will likely remain around the 2% mark to the end of the forecast period in 2024, meaning the industry will be 22.4% smaller in 2024 than expected prior to the pandemic.

Lower consumer demand and increased impact on investment income due to financial volatility are the key factors, said analyst Deblina Mitra.

“As of July 2020, nearly one in five policyholders of superannuation pension products reduced or stopped superannuation contributions due to the COVID-19 outbreak,” Mitra added.

In addition, the pandemic has led to a rise in cyber-attacks and scams in Australia, as working from home models increased post-lockdown.

“The frequency of attacks on government, health and education services and various industries have increased in 2020. This may be one positive for the insurance industry going forward, as high-profile examples of these attacks will generate increased demand in cyber insurance products in the country,” Mitra concluded.