Life insurance is an important sector of the Australian financial services industry, accounting for $24.7 billion in gross premiums in the 12 months ending 31 March 2018, making it 1.4 percent of Gross Domestic Product, generating $2.2 billion in profit for shareholders and $14.8 billion of benefit payments for policyholders and superannuation fund members.
KPMG’s Life Insurance Insights Report 2018 and dashboard provides analysis and insights based on financial results up to 31 March 2018 for the Australian life insurance market. The report also includes KPMG’s views on the key challenges and opportunities facing Australian life insurers. We reflect on the implications of these current and emerging themes, which may require Australia’s life insurers to significantly adapt the way they do business.
Key challenges and opportunities
- Changing industry structure: following a wave of M&A activity, the industry has seen increased ownership of Australian insurers by foreign-controlled companies and a reduction in market share held by the largest insurers in the Australian market.
- Insurance in super: has been the growth engine of the life insurance industry over the last decade. However, this trend may reverse in the next 3 years if the three measures in the 2018/2019 Federal Budget are adopted.
- Data and disruption: data ownership and use of data is becoming a critical strategic asset. Powered by digitalisation and an increasingly connected world, we are witnessing a proliferation in the volume and breadth of data available for analytics consumption.
- Innovation: Investment in cognitive technologies will be an area of focus for many CEOs through to 2020, with significant opportunities in the financial sector, specifically in insurtech.
- Public trust and life insurance: in recent years, we have seen the level of public trust eroded, with poor customer experience being reported through the media resulting in the industry claims review in 2016 by ASIC, and the proposal in the Federal Budget for reforming default insurance in superannuation. Successfully navigating through this issue is a key challenge as well as an opportunity for all life insurers.
- Legacy system transformation: the environment surrounding the life insurance industry is changing faster than ever and as a result, many organisations are seeking to transform legacy IT platforms, especially in the core administration area.
- Privacy: will be of increasing importance on a global scale, as evidenced by the introduction of the EU General Data Protection Regulations (GDPR), which came into force on 25 May 2018. Although designed to achieve consistent data privacy law across Europe, it may have implications for Australian insurers.
Download the full report (PDF 1.4MB)
Explore the interactive dashboard
Read the media release