Life insurance industry consolidates

The Australian life insurance industry has undergone significant change in the past 20 years to be now dominated by the major banking groups, according to a new analysis published by the Australian Prudential Regulation Authority (APRA).

The analysis, published in an article this week, pointed out that life insurers that are part of banking groups now account for 55 to 60 per cent of policy-owner assets and premium income.

Looking back at the evolution that has occurred over the past two decades, the APRA article said the concept of mutuality had all but been forgotten after the demutualisations in the 1990s.

"State governments have vacated the market completely through privatisations and public listing of their interests in life insurance," it said.

"Today, there are only 18 financial service groups, some with more than one life insurance licence, writing new business in Australia," the article said.

"The local banking industry has evolved into its now prominent position through a combination of organic growth of their own life insurer brands and aggregation of other life insurers, either by direct purchase or through acquisition of smaller banks that had earlier established their own life insurer brands," it said.

The APRA article said this trend had continued with a spate of acquisitions during 2008-10.