Increase in direct life insurance products
The latest Rice Warner report shows the number of direct life insurance products sold in Australia has increased from 109 in 2008 to 138 today. These include term, trauma and funeral insurance, accident products, income protection and others.
There are 27 life companies active in this market, with GE Money and HCF Life each offering over 10 different products.
Over the past year, the increase has been primarily in term insurance, offering death, total and permanent disability and trauma cover. Rice Warner found firms have been heavily relying on Internet and television advertising to promote the products directly to customers.
One of the key points highlighted in the report is that direct life products could be up to four times more expensive than obtaining cover through the personal section of an industry superannuation fund, but cheaper than some intermediated products.
According to the report, the online risk insurance market developed strongly over the past year, with many new sites and products launched, which translated to sales.
Rice Warner suggested the competition in both markets, direct and intermediated, would lead to direct distribution being a key growth area for life companies over the next few years.
Excluding loan and mortgage risk insurance, which is often sold through advisers, direct life insurance constitutes around 13.8 per cent of overall risk insurance sales and 10 per cent of in-force business.
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