Latest research projections indicate a sustained growth period for the financial services market, with the highest growth rate forecast for the risk insurance sector.
In its latest DEXX&R Market Projections Report, the researcher predicts the total size of Australia’s financial services market will grow to $2.77 trillion by June 2019, with an average annual growth rate of 8.7% over this next decade.
The superannuation market will hold the vast majority of those assets (approx 75%), and is predicted to grow at an average annual rate of 9.1% over the next ten years, with the retirement incomes sector tipped to grow on average by 11.4% per annum.
inforce risk business will … almost quadruple its current size … by June 2019
But while the risk insurance sector holds a much smaller proportion of the overall assets within market, DEXX&R forecasts that inforce risk business will grow at a faster rate over the coming decade, by an average of 14.25% per annum. In doing so, it will almost quadruple its current size of $13 billion, as at June 2009, to almost $50 billion by June 2019.
According to DEXX&R, this high growth will primarily be driven by an increase in premiums flowing from risk business held within the superannuation funds.
The researcher adds that sales of risk products are currently benefiting from renewed interest from advisers who had previously focused on investment products and this trend is expected to continue for at least the next two years.
Within the group risk market, DEXX&R suggests that improvements in default cover provided to members of industry and retail superannuation funds has contributed to strong recent growth and will continue to do so over the short term.
However, over the medium term, DEXX&R believes the growth rate in in-force group premiums will slow, due to the impact of lower premium rates offered by insurers and re-insurers when large schemes are retendered.
DEXX&R adds that future projections will take into account the impact of any changes stemming from current reviews being conducted into Australia’s superannuation and financial markets.
