Latest data snapshot from GlobalData, who see strong growth in Australia.
The Australian general insurance industry is set to grow at a compound annual growth rate (CAGR) of 9.1% from AUD86.8 billion ($60.1 billion) in 2023 to AUD123.1 billion ($83.9 billion) in 2027, in terms of direct written premiums (DWP), forecasts GlobalData, a leading data and analytics company.
GlobalData’s Insurance Database reveals that the Australian general insurance industry is expected to register annual growth of 9.5% in 2023 and 9.8% in 2024. The growth will be supported by increasing healthcare awareness after the pandemic, rising demand for natural catastrophic (Nat-cat) insurance due to climate change, and a rise in property and motor insurance premium rates.
Sutirtha Dutta, Insurance Analyst at GlobalData, comments: “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.”
Personal Accident & Health insurance is the leading line of business in the Australian general insurance industry, accounting for 34.8% share of the premiums in 2023. The post-pandemic increase in healthcare awareness has led to a rise in the membership of private health insurance, which has registered growth for 10 consecutive quarters starting June 2020. As per Private Healthcare Australia (PHA), membership for private health insurance grew by 2% in 2022 and around 55% of the Australian population has private health insurance. The rise in membership has supported PA&H DWP to grow by 5.4% in 2022 and 6.4% in 2023.
Dutta continues: “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 the demand for private health insurance. PA&H insurance is expected to grow at a CAGR of 6.0% during 2023-2027.”
Motor insurance is the second largest line of business, accounting for a 24.8% share of the general insurance DWP in 2023. Motor insurance is expected to grow at a CAGR of 10.3% during 2023-27, driven by a rise in vehicle sales. According to the Federal Chamber of Automotive Industries (FCAI), new vehicle sales increased by 10% during January to August 2023 as compared to the same period in 2022.
An increase in premium rates will also support motor insurance growth. As per Insurance Australia Group (IAG), motor insurance premiums have increased by 12-14% during 2023 against an increase of 10% in December 2022.
Property insurance is the third largest line of business, accounting for 24.4% share of the general insurance DWP in 2023. Property insurance is expected to grow at a CAGR of 13.6% during 2023-27.
Challenging market conditions leading to a rise in premiums and an increase in the demand for NatCat policies due to the presence of extreme weather events will support property insurance growth. As per IAG, property insurance premiums have increased by 20% in 2023 against an increase of 7% in December 2022.
Liability, Financial Lines, Marine, Aviation and Transit (MAT), and Miscellaneous insurance accounted for the remaining 16.0% of the general insurance DWP in 2023.
Dutta concludes: “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 NatCat losses and rising inflation will remain a key challenge for the profitability of Australian general insurers.”
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