There appear to be genuine signs of recovery in Australia’s retail life insurance sector according to industry specialist firm, NMG Consulting. But these green shoots are accompanied by concerns that adviser capacity and structural issues remain major barriers to long-term sustainability.
This was the overarching picture painted by NMG Consulting Partner and Head of Insights & Analytics, Sam Tremethick, at the 2025 Bombora Advice Conference in Hobart.
In delivering a wide-ranging and data-rich briefing to delegates Tremethick observed the past 12 months had been far from boring for life insurance, noting highlights including:
- A new entrant, with the launch of Futura Protection via the NEOS Platform
- Major consolidation through the Acenda/Resolution Life merger
- A wave of portfolio repricing—particularly across TPD and trauma
- Questions of sustainability of TPD coverages within the retail eco-system
He also highlighted growing competitive pressure as insurers sharpen their adviser-facing offers.
Green shoots in new business, but with growth limitations
NMG market data to the end of Q3 2025 revealed double-digit growth, with new business up 13.6% on the same quarter last year – the strongest second-quarter result since 2020, according to Tremethick. On a rolling 12-month basis, he says the industry is tracking towards its best new business year since 2019 , i.e. pre-pandemic levels.
However, Tremethick challenged some other industry commentary predicting a rapid rise to $500m in annual new business risk sales. The constraint, he said, is not consumer demand but the capacity of the advice profession.
Without regulatory change, more efficient advice pathways, or improved general-advice capability, NMG forecasts annual growth of only 8.5% in the coming years.
Lapse rates steady, but ageing portfolios add pressure
Industry lapse rates remain relatively stable at 14.1% annualised, according to NMG data, contrary to expectations that cost-of-living pressures would drive higher discontinuances.
Tremethick attributed the resilience partly to the financial stability of (affluent) retail clients and to the mathematical effect of premium increases inflating the in-force base.
However, he warned that the sector faces a “portfolio age cliff,” citing these key findings:
- 65% of all in-force policies are held by clients over 50
- 77% of policies have been in force for more than five years
As portfolios age, Tremethick told delegates lapse rates trend upwards, thereby intensifying pricing and sustainability challenges, especially amid rising lump-sum claims costs.
The distribution challenge
Tremethick highlighted a crucial industry concern relating to adviser availability. He said only 6,000 advisers wrote at least one individual life risk policy last year, versus the potential of serving 17.3 million working Australians, with productivity increasingly concentrated towards the top risk writers:
- The top 100 advisers wrote 17% of national new business
- The top 1,000 wrote 54%
This has created what Tremethick called a “murky middle” – advisers ranked 101 to 1,000, whose new business growth is subdued despite strong client demand. Supporting this middle cohort to lift productivity is essential, he said, if risk advice is to meet the unmet need for it.
Path forward: collaboration, reform and technology
Tremethick concluded by highlighting both momentum and risk. The industry shows encouraging signs – stronger sales, lower lapses, growing engagement among non-specialist licensees, and clear unmet consumer need.
But he cautioned structural hurdles around TPD, risk-pool growth and regulatory settings require coordinated action from advisers, licensees, insurers and policymakers.
He also echoed conference discussions on the role of AI-driven productivity, noting its potential to materially expand advice capacity if implemented responsibly.
