May 22, 2017
The direct life insurance sector has not increased substantially over the past three years with growth being offset by lapses and policy closures, according to research company, Strategic Insight.
Releasing its Direct Life Insurance Report 2017, Strategic Insight stated that direct insurance makes up 25 to 30% of the individual risk market and has remained constant at that level for the last three years despite the release of new products and intensive marketing activities by life insurance providers.
According to Strategic Insights, around 50% of the $1,132 million of individual risk inflows recorded across 2016 went into Term Life products ($562 million) and a further 29% ($328.3 million) went into Funeral Cover. Income protection attracted 12% of inflows while Accidental Death, Trauma and TPD recorded single digit levels of inflows.
“…a very large part of new premiums are being offset by lapses and policy closures”
Strategic Insight stated the total amount of inforce direct business, including Risk Lump Sum and Income Protection, was $1,496 million as at December 2016 “…in-force business has continued to grow very slowly” and “…a very large part of new premiums are being offset by lapses and policy closures”.
The group also found that direct premiums were more expensive than adviser premiums across Life, Trauma and IP with the gap between these opening further as direct premiums increased and advised premiums decreased.
The finding echoes those of research released by lifeinsurancedirect.com.au in mid-2016 which found direct insurance was 25% to 45% more expensive than advised insurance for men and women aged 25 to 55 (see: Direct Insurance Consistently Overpriced).