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Takeovers to cement major players’ market dominance

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Australia’s six largest life insurers will increase their share of inforce premium to almost 88% once the latest round of takeovers is completed, according to a report by market analyst Strategic Insight.

AMP, BT/Westpac, CommInsure, MLC Life, OnePath and TAL have 74% of inforce premium at present.    

The landscape will change when Zurich completes its OnePath deal and AIA absorbs CommInsure, making OnePath Australia’s largest life insurer with 19% of premium and putting AIA on 16%.

AMP, which has dominated the Australian market for years, will be equal with AIA.

With AMP considering selling its life business and ClearView being swallowed up by part owner Sony, the landscape may change further, Strategic Insight says.

Recent inforce premium growth shows the change in the Australian market.

AIA, BT/Westpac, TAL and OnePath have recorded double-digit annual premium growth in in the past 10 years, while market leaders AMP and MLC achieved 5.6% and 5.1% respectively.

New players such as ClearView have been the winners of market redistribution. ClearView recorded 19.2% inforce premium growth over the past 10 years. Hannover Life, a reinsurer selling direct through a number of insurers, has reported 21.4% growth.

The strongest premium growth came from a direct business – Allianz Australia Life achieving 36.8%.

Average annual premium growth was 8.6% in the 10-year review period.

Changes in inforce premium market share over the past 10 years show AIA up 4%, BT/Westpac up 3.8%, Zurich 3.3% and TAL 2.1%.

MLC’s share fell 5.5%, AMP was down 5.1% and CommInsure fell 3.2%.

Further pressure on traditional life insurers has come from the direct distribution channel, which accounts for about 20% of inforce annual premium.

TAL and CommInsure maintain market-leading positions in the direct market, and there are significant shares for OnePath and MLC.