The industry is growing despite rising reinsurance costs
Melbourne, Australia (PRWEB) March 22, 2013
The General Insurance industry provides protection to individuals, households and businesses from the financial loss associated with events such as car accidents, floods, break-ins and medical malpractice. General insurers provide this coverage at a fraction of the potential loss by spreading risk. The industry earns revenue from the sale of insurance policies (premium income) and the investment of premium reserves in bonds, stocks and other assets (investment income).
According to IBISWorld industry analyst Ee Jen Lee, “over 95% of the industry's premium income is derived from the renewal of policies that relate to existing risk, with the rest reflecting a change in risk exposure or pricing conditions”.
Policy pricing alternates between softening (price declines) and hardening (price increases). A hard market will generally produce growth in premium revenue without a change in coverage.
Australia's General Insurance industry is expected to generate revenue of $63.9 billion during 2012-13, a 5.1% rise on 2011-12. Gross premium income will reach $51.3 billion, up 3.6% year on year.
“As the economy recovers, consumers' ability to insure cars, home and contents will increase, as will the value of insurable items”, says Lee.
The modest gain in premium income will also be driven by higher prices. This will occur as general insurers pass on increased reinsurance costs and look to strengthen balance sheets.
For the five years through 2012-13, industry revenue is expected to have increased at a compound annual rate of 5.6%, accentuated by the weak base year in 2007-08. With investment markets expected to strengthen as the global and local economies accelerate, the future looks more promising for the General Insurance industry.
Industry consolidation is likely to continue over the next five years, with large players such as Insurance Australia Group Limited, QBE Insurance Group Limited, Suncorp Group Limited and Allianz Australia Group Limited expected to acquire many of the industry's minor players.
For more information, visit IBISWorld’s General Insurance report in Australia industry page.
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IBISWorld Industry Report Key Topics
This industry covers general insurers and reinsurers. General insurers underwrite insurance policies to protect individuals and businesses from the financial loss associated with property, casualty, liability and other risks. Underwriting involves assuming risks and assigning premiums. Reinsurers assume all or part of the risk associated with existing insurance policies originally underwritten by other insurers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.