The life insurance industry in Australia is projected to grow at a compound annual growth rate (CAGR) of 5.9% from AUD33.6bn ($23.3bn) in 2023 to AUD44.7bn ($30.4bn) in 2028.
This is in terms of gross written premiums (GWP) according to GlobalData.
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According to GlobalData’s Insurance Database, the Australian life insurance industry growth will pick up pace in 2024, supported by macroeconomic and demographic factors such as a stabilising economy, an aging population, low unemployment rates, and improved investment returns.
In addition, in the short term, the industry growth will be helped by a rise in premium rates due to inflation, but long-term growth will be boosted by an evolving regulatory landscape.
Sravani Ampabathina, insurance analyst at GlobalData, commented: “The Australian economy is recovering from the high inflation faced during 2022-23. The gradually stabilising economy and increasing insurance awareness will present opportunities for the growth of the life insurance industry over 2024-28.”
Persistent inflation led to the consumer price index (CPI) reaching a high of 7.8% in December 2022, gradually decreasing to 4.9% in October 2023. With increased monetary tightening by the Reserve Bank of Australia (RBA), inflation is expected to reach the targeted 2-3% in 2024, which will provide an impetus for higher consumer spending on life insurance.
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By GlobalDataAmpabathina added: “Low unemployment rate and steady investment income are the other macroeconomic factors that will aid life insurance growth over 2024-28.”
Furthermore, the post-COVID-19 pandemic increase in healthcare awareness has led to a rise in the membership of private health insurance. According to the Private Healthcare Australia (PHA), membership for private health insurance grew by 2.3% in 2023 and around 55% of the Australian population has private health insurance.
Ampabathina continued: “Australian regulators have introduced multiple reforms in 2023 to bring the life insurance practices in line with international standards. This is expected to improve transparency and boost customer satisfaction and positively impact the life insurance industry over the coming years.”
