Latest findings from Rice Warner suggest the insurance gap may finally be starting to decline.
The researcher has released its annual Risk Insurance Market Projections Report, which makes various forecasts about future risk insurance premium income levels.
One of the key findings saw a projected increase to the average level of death cover per head of working age population in the 12 months to June 30 2009. Rice Warner says this increase has been driven by a number of factors, including:
- Increased awareness of the need for personal financial security by consumers as a result of the Global Financial Crisis
- Increased media attention on risk insurance
- Marketing efforts by insurers
- Industry campaigns such as the IFSA Lifewise campaign
- An increased focus on risk insurance by financial advisers
- A continuation of the trend towards the provision of increased levels of default cover by superannuation funds
While the researcher predicts the total risk insurance market will grow by 6.6% per annum in real terms (ie 2009 dollars) over the next 15 years, it expects the rate of growth will decline as levels of insurance cover increase due to the combined impact of the factors outlined above.
As the size of the risk insurance market grows over the next 15 years, Rice Warner expects future growth to be driven by a combination of:
- Continuing innovation in the delivery of both full and limited financial advice
- Further increases in default levels of risk insurance by superannuation funds
- Improved communication with superannuation fund members and the delivery of financial education
- Technology improvements, making it easier to obtain advice and to buy
- Improved auto-underwriting and other risk management techniques and product designs, taking the pain out of the application process
- Improved customer databases held by superannuation funds and insurers, thus facilitating better target marketing and direct distribution
- Continuing competition, both between existing insurers and from new niche insurers entering the market, keeping costs and prices down
