Direct market flat despite intensive marketing

According to Strategic Insight’s May 2017 analysis of the direct life insurance market, direct life insurance has remained at approximately a 25 to 30 per cent share of the individual risk market.

This is despite a significant amount of activity in the sector by insurance providers that are creating and innovating new products both under their own brand and affinity brands, as well as intensive marketing activities.

“While in-force business has continued to grow very slowly, a very large part of new premiums are being offset by lapses and policy closures,” Strategic Insight said in a statement.

Further, the analysis found direct premiums to be more expensive than the advised premiums across life, trauma and income protection.

“The gap between advised and direct has continued to increase with larger increases shown in life cover where advised premiums have reduced and direct premiums have increased,” Strategic Insight said.

Individual risk inflows for direct business was at $1.132 billion over the year ending December 2016.

This mainly came from term life products, comprising nearly 50 per cent of the direct market at $562 million, and was followed by funeral insurance at $334 million, representing just under 30 per cent of the direct market.

In-force direct business including risk lump sum and income protection was $1.496 billion as at December 2016.

The leading insurers in direct life insurance business according to market share were TAL (22 per cent), CommInsure (15 per cent), Greenstone/Hannover (8 per cent), OnePath Australia (8 per cent) and NAB/MLC (7 per cent).