The Australian general insurance market is set to grow at a faster pace this year, with property and casualty (P&C) premium to increase 3.8% from 0.8% last year, Allianz says today.

Allianz says P&C demand has held up well despite the economic disruptions of the pandemic, linking the resilience of the market to the strength of the Australian economy. Massive fiscal support measures largely cushioned the economy since the pandemic broke out in March last year.

The predictions are contained in Allianz’s annual Global Insurance Report covering 61 major markets including Australia.

According to the report, the Australian P&C market generated €28 billion ($44 billion) in premium last year and is in line for an average 4.2% growth every year until 2031. If achieved, that will take premium to about €43 billion ($67.6 billion) within a decade.

“The insurance market has proven resilient in the face of the economic impact of the pandemic,” Chief Technical Officer James Fitzpatrick said. “This is evident in the industry’s continued growth and strong expected rebound [this year].

“Australia’s economy has already bounced back positively; and the report’s findings and projections reflect this broader economic recovery.”

He says the Federal Government’s Homebuilder and New Home Guarantee schemes have underpinned the housing market, indirectly lifting growth in home and contents premium.

Motor premium is also likely to grow, driven by a recovery in new car sales as bottlenecks on supply chains caused by the pandemic gradually ease.

In the report, Allianz says the insurance industry “got off relatively light” during the COVID-19 crisis despite a 2.1% decline in global premium, including life, to €3.73 billion ($5.9 billion) last year.

It says the decline was less severe than feared, due in part to the P&C sector, which managed to grow its premium by 1.1%.

“In retrospect, there is one factor in particular that contributed to the resilience of the non-life business: digitalisation,” Allianz says.

“The rapid and smooth transition to digital processes in both sales and operations largely avoided a standstill in new business, which threatened to result from the many contact and mobility restrictions implemented to contain the pandemic.”

While COVD-19 was a hard blow for insurers, the post-pandemic landscape offers a plethora of opportunities for the industry, Allianz says.

The public health crisis has increased an awareness of the need for risk services in a volatile, uncertain, complex and ambiguous world.

“The demands on the industry have increased dramatically,” Allianz said. “In addition, there are relatively new and fast-growing business areas such as cyber risks and transition risks of the green transformation.”

Allianz says the next few years will show whether the insurance industry as a whole is up to this challenge.

“Yet, it will not have much time for transformation. It may not necessarily lose its role as a risk carrier but it will lose the competition for customers to big tech companies or new competitors.”

Click here for the report.