Australia’s direct life insurance sector has recorded falling sales as group life insurers increase market share, according to a new report from Rice Warner.

Direct life sales last year totalled $496.5 million, down 6.5% on the previous year.

However, annual inforce premiums were up 4.6% to $1.5 billion.

“Direct term insurance is now becoming price-competitive with adviser-sold insurance for 30-year-olds, [which] is a result of increasing prices in the retail market,” Rice Warner Head of Consulting and Research Jenni Baxter said.

“With the retail and group insurance markets facing significant challenges, there exists the key opportunity for direct to grow in market share.”

But Ms Baxter says super funds are expected to increase cross-selling of insurance as they focus on expanding financial services offerings to members.

“Super funds are adding to the competitive pressure by reaching out directly to members, urging them to increase insurance coverage with minimal or no underwriting,” she said.

“Overall, the direct market has the key advantage [over retail and group] of greater agility and speed to change. It continually tests and re-tests distribution models. With the right focus and technology spend, direct retains the potential to perform well.”

Rice Warner says the rise of technology and its ability to disrupt established business models means the insurance industry may be poised for a revolution.

“Future technologies will blur the lines between advice and direct, opening up opportunities to engage with insurance clients in different ways,” Ms Baxter said.