According to Rice Warner’s latest Direct Life Insurance Market Report, Australia’s direct life insurance market sales increased by 10.6 per cent and in-force premiums by 13.0 per cent in the 12 months to December 2012.
However, despite the strong growth direct life only increased its market share fractionally, from 11.9 per cent to 12.0 per cent over the year.
Despite the solid overall growth in direct life, many direct life insurance ventures failed to deliver anticipated business volumes and others have been closed, the report stated.
Also, despite some insurers experiencing higher lapse rates during the year, this generally had less impact than in the adviser market, according to Rice Warner.
Richard Weatherhead, principal and head of life insurance of Rice Warner said growth in funeral insurance continues to surprise on the upside and reflects distribution initiatives of new customer segments by some insurers.
Segments within direct life, in-force premiums for credit related insurance, covering mortgages, loans and credit card debt were up 9.5 per cent.
Funeral insurance in-force premiums were up 14.1 per cent and term, income protection and accident insurance in-force premiums grew 15.1 per cent.
“Term, income protection and accident insurance business has grown more rapidly than traditional adviser sold and superannuation fund risk insurance in 2012, reflecting increasing consumer confidence in buying risk insurance direct, rather than with advice,” Mr Weatherhead said.
Insurance through super continues to be more affordable than insurance purchased directly or through advisers, despite recent price increases at industry super funds, the report stated.
Adviser-sold products also include allowances for advice costs via commission, making direct comparisons misleading, Rice Warner noted.
