In an effort to reach this growing client base directly, some players have expanded online sales platforms
Melbourne, Australia (PRWEB) September 23, 2014
Steady growth in premium revenue provided a level of stability for the Commercial Motor Vehicle Insurance industry in Australia over the past five years, as investment revenue was more volatile. While the industry derives the majority of its revenue from insurance premiums, many operators rely on investment income to solidify their profit margins. As a result, according to IBISWorld industry analyst Stephen Gargano, “overall revenue tends to fluctuate to a greater degree than underlying demand for commercial motor vehicle insurance, which has exhibited consistent growth.” Over the five years through 2014-15, industry revenue has increased by an annualised 1.3%. Revenue growth in 2014-15 reflected this trend, also increasing by 1.3%, to reach $3.4 billion. While revenue growth appears low, this is due to high investment revenue in the base year of 2009-10.
Strong demand for road transport has fuelled the need for commercial motor vehicle insurance over the past five years. This trend is expected to continue as industry operators rely on commercial vehicles to transport people and products. “In an effort to reach this growing client base directly, some players have expanded online sales platforms,” says Gargano. This trend - particularly prevalent when insuring low-weight vehicles - has allowed operators to capture clients directly and avoid broker fees. For heavy haulage or large fleets, brokers remain the prevailing avenue for sales, with premiums being much larger for these vehicles. However, ongoing efforts to improve vehicle safety have allowed insurers to provide more competitive costs per risk, particularly where operators can demonstrate safer practices. This is expected to become more significant over the next five years, as operators seek to tailor insurance packages to meet the specific needs of clients.
The Commercial Motor Vehicle Insurance industry is forecast to continue its pattern of growth over the next five years, with consistent rises in premiums expected to provide stability. As asset levels rise, investment revenue is also expected to trend upwards. This trend will support profitability, with margins expected to strengthen. Insurers are expected to promote a wider suite of premium-priced services for commercial clients in order to support revenue growth. These services are likely to include management of repairs, roadside assistance, towage and replacement vehicles. Market share concentration for the industry is high. The top four companies account for a large proportion of revenue, with Suncorp and IAG leading the market. Concentration is expected to increase as industry players move towards greater consolidation. The scale required to operate within the industry tends to encourage mergers and acquisitions, and larger clients also tend to prefer enlisting the services of larger players.
For more information, visit IBISWorld’s Commercial Motor Vehicle Insurance industry in Australia report page.
This industry provides insurance for vehicles used for business purposes. These include vehicles such as trucks, vans, trailers, ambulances and buses.
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Products & Markets
Products & Services
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Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
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