Financial giants AMP and Axa Australia are lagging behind the major banks in winning life insurance business, bucking a trend towards above market growth by most major players.
The second quarter of 2007 was another strong period of growth in risk sales, according to data released yesterday from researchers and actuaries Plan For Life and Deutsche Bank.
New premiums grew at a rate of 13.5 per cent to $5.8 billion and total sales increased 21 per cent on the previous corresponding period, Deutsche Bank said, using Plan For Life's preliminary data.
Analysts said the risk market was experiencing the highest rate of growth since 2001 with the major banks leading the charge as they refocused on risk as a higher return business.
"While some of this growth may have been price driven, the major banks still appear to have the upper hand in capturing the industry upturn," Deutsche Bank analysts James Coghill and Scott Olsson said in a report.
Those enjoying accelerated growth rates this quarter were the Commonwealth Bank of Australia, Tower, Aviva, St George Bank and Westpac, who all more than doubled new risk premiums.
Traditional life insurers AMP and Axa lagged behind, with 10 per cent growth for AMP and zero for Axa.
Over the reporting season both companies had alluded to the distraction from the June superannuation changes as a possible reason for low growth in risk sales in the first quarter of 2007.
"This distraction appears not to have impacted others, with another remarkably strong period of risk sales reported by most players," Deutsche's Coghill and Olsson said.
"A reluctance to sharpen the underwriting pencil on pricing and features may prove the right margin strategy over the long term, but the traditional life companies are forfeiting growth at present. [Tower] is a clear outlier in this respect, posting another very solid quarter."
Tower managing director Jim Minto said the growth was encouraging but regulation is still stopping middle Australians from getting life insurance because financial advice is too expensive.
""The industry and Government need to look at a more accessible alternative to the full-advice model which effectively prevents people getting life insurance advice unless their annual premium is over $1000," Minto said.
