Pricing to converge in risk insurance market
Pricing structures for the risk insurance market will converge over the next 15 years, according to Rice Warner Actuaries.
Its latest 2012 Risk Insurance Market Projections Report said that while financial advisers attempted to separate the cost of advice from the price of risk cover insurance, industry super funds and other employer-based risk arrangements would increase insurance prices for the first time in years.
Rice Warner principal Richard Weatherhead said product designs for the three key market segments - financial advisers, superannuation funds and direct distribution - had started to converge a few years ago.
"This trend will continue with advised business being generated through traditional financial advisers, superannuation fund-based advisers and telephone based-advisers," he said.
Online insurance advice would also evolve through the introduction of scaled advice and its suitability for life insurance and self-service, according to Weatherhead.
The projected 5 per cent annual growth rate after inflation will more than double the $11.3 billion market - but will fall short of the 9.8 per cent growth per annum achieved over the last 15 years, the report said.
Retail business is expected to surpass the wholesale market, accounting for 53 per cent of the market by 2027 compared to 44 per cent at June 2012.
The recent raft of 'low cost' super products to hit the market as a result of banks competing with not-for-profit funds will propel risk insurance sold through personal superannuation beyond its previous growth levels to 5.5 per cent.
Employers would also show more enthusiasm in increasing employees' risk insurance cover beyond traditional super arrangements, leading to 5.8 per cent growth per annum in the corporate stand-alone market, the report said.
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