The direct life insurance market in Australia is growing by 20% each year, a factor that insurers cannot ignore, warns a leading management consultancy .
Consulting firm, Oliver Wyman, which specialises in strategy and organisational transformation, has issued a report which explores the future growth of the direct life industry. According to the report, by 2021 more than 40% of new insurance business in Australia is expected to come through direct channels.
The report, produced jointly with research firm Plan For Life, suggests that growing consumer confidence with technology such as the web and smart-phones has led to the increase in direct sales.
Digital adoption and technology advances … will continue to present opportunities
Oliver Wyman also suggests that future growth in direct insurance may be driven by advisers. Citing the new legislative landscape as a driver for change, the report says advisers may start to introduce new pricing models into their businesses, allowing them to offer direct insurance products to their clients.
Brad Clarke, Head of Insurance Strategy for Oliver Wyman, said retail insurers could not afford to ignore the direct market, suggesting companies need to focus on new strategies such as channel integration, leveraging new media, segmentation of insurance propositions and reclaiming the customer relationship.
“Digital adoption and technology advances as well as scaled and remote forms have assisted and will continue to present opportunities,” he said.
“We expect many players however to continue to struggle to differentiate between what sounds like a great idea and one that will result in a sustainable business.”
