Group life insurance is delivering the highest growth in the market but no profits, according to Experien CEO Clive Levinthal.

“Despite the life industry reporting premium growth above 10%, profits are not very strong and in group they are almost zero,” he told the Actuaries Institute summit in Sydney last week.

“The reasons [for] small profits are different for each type of business. Some sectors are experiencing higher lapse rates and a lot of this is due to the competitiveness of some insurers.”

Insurers have relied on older legacy products written at higher profit margins to raise their bottom lines, Mr Levinthal says.

“As the old products run off, questions are raised about insurers relying on this profit stream.

“We are seeing some price rises in new business, and some group accounts have risen as much as 45% in recent months. The direct market hasn’t seen these price rises, because they are already high.”

Life industry profitability is not helped by the public’s lack of interest in cover.

“Consumers are apathetic towards buying [life] insurance. We need good salespeople to encourage them to buy insurance, and that is a challenge.

“There are not enough incentives to encourage people to buy life.”

Direct sales are an important distribution channel, but consumers mostly still use the internet for research only, Mr Levinthal says.