Local insurers can achieve growth in today’s competitive market, but they will have to look further than organic growth, according to KPMG’s Chair of Financial Services Andries Terblanche.

The fact that 10 years ago the five biggest insurers had 36% market share compared with about 80% today means there’s not much room for organic growth.

Mr Terblanche says cutting premiums to achieve market share – which analysts suggest has been happening recently – is not sustainable over the long term.

However, there’s a large pool of untapped premium income in terms of underinsurance. If accessed, it could build revenue for the insurers and better protect customers’ assets.

“The opportunity for growth as a result of overseas acquisitions and joint ventures is also an option.”

Overseas expansion will also be higher on the agenda for underwriters next year, according to Mr Terblanche.

“The Australian market is limited by its low population. However, countries with large populations like China look very attractive to insurers, as the longer-term growth prospects are extremely high.

“As with any attractive investment there is risk, and Australian companies expanding offshore must ensure they are appropriately structured and well advised on how to operate in a foreign market.”

In the next year the challenge for general insurers will be to find growth and remain profitable despite increasing competition. “We expect the softening of the market to continue but not with the same depth as in prior cycles.”