Direct distribution will be a key growth area for life companies over the next few years, according to Rice Warner Actuaries.
The firm has just released its 2010 Direct Life Insurance Products report, which highlights the steady and continuing growth of direct life insurance sales.
… direct insurance has also increased its share relative to other market sectors
In addition to increased sales, the report says direct insurance has also increased its share relative to other market sectors, increasing by 0.7% over the past year.
Rice Warner says direct life insurance accounted for just under 14% of overall risk insurance sales during its reporting period and now represents 10% of all in-force insurance business.
According to the researcher, the main area of growth has been in the lump sum product area, across the spectrum of death, TPD and trauma cover options.
The ever-growing use and convenience of the internet has been a factor in the continued rise in direct life sales, including its ability to link the client from the insurance proposition through to automated online underwriting, where required.
The report says the relative cost of direct to consumer insurance remains high, due to its typically minimal underwriting requirements, which sees the direct products costing between 150% and 400% of similar products offered within industry superannuation fund products, and between 85% and 125% of intermediated full retail product offerings.
Rice Warner reports many new online insurance sites and products have been launched during the past twelve months, with 27 life companies now competing in this space.
Technology advancement is seen by Rice Warner as a driver for further growth in the direct insurance market, which it says will lead to direct distribution being a key growth area for life companies. These technological advancements are being made across:
- Customer analytics
- Web based insurance needs calculators and applications
- Automated assessment of individual risk factors
- Online completion of business
