Overall life insurance sales were up 7.1 per cent to $2.5 billion in 2012 but new business in group risk actually decreased over the same period, according to DEXX&R data.
Total group risk new business decreased by 5.2 per cent to $805 million over the twelve months to 31 December 2012.
DEXX&R managing director Mark Kachor told InvestorDaily it is important not to read too much into the fall in the group space as the sector can be "very lumpy" in terms of flows.
Due to the timing of large premium payments by group policyholders, who are typically industry funds, significant fluctuations can occur from quarter to quarter in reported group new premium.
In-force group risk premiums increased by 15.7 per cent to $3.6 billion over the 12 months to December 2012. TAL increased 23.3 per cent to $787 million and CommInsure was up 21.7 per cent to $533 million.
Competition in the space, as well as super fund consolidation, could be having an effect on renewals, he said.
"In some cases companies are getting more cover for less premium than 12 months ago," he said.
Intense competition for the AustralianSuper business has also meant fund members are getting improved cover for a lower premium.
"This has been an intensely competitive space for a while, and all the CEOs are saying it's unsustainable in the long term," Mr Kachor said.
"I think we'll see a return to increasing premiums, and continued growth in that market."
Mr Kachor said the retail market continues to grow and the signs are positive for the sector.
"That's partly because there's a lot of distribution focus on risk, there hasn't been a lot of excitement in equities [from advisers], he said.
Sales of individual lump sum risk business increased by 15.6 per cent to $1.3 billion in the 12 months to December 2012, according to the DEXX&R data.
CommInsure saw a 26.1 per cent increase, Westpac Life a 41.3 per cent increase, AIA Australia sales were up 46.1 per cent and Macquarie had a 37.9 per cent increase, according to DEXX&R.
In-force individual lump sum business increased by 10.2 per cent overall to $5.3 billion as at December 31 with CommInsure, TAL, Westpac AIA and Macquarie all performing strongly.
Total new disability premiums for the year increased by 10.1 per cent to $445 million and disability in-force business increased 9.7 per cent to $2.0 billion.
