Further shakeups are expected in the $6.4 billion group insurance market, a new report from actuaries and researchers Plan for Life says.

It predicts more insurers will exit the market because of mounting pressure on margins.

The Insurance In Super report says one or more insurers are expected to quit offering group insurance in the medium-term as they are unwilling or unable to provide the investment that is required to support their operations.

At present there are at least 10 group insurers, with almost 60% of the business written by TAL and AIA.

The report says a number of the existing players are either not taking on new group business or have limited appetite in the current low margin environment.

“Market profitability is under significant pressure driven by factors including increased mental health claims, which will be compounded by COVID-19, and a loss of volume,” the report says.

Aside from earnings pressure, other factors such as the prospect of increased regulatory changes and mergers of super funds are expected to alter the group insurance landscape.

The report says 187 funds were regulated by Australian Prudential Regulation Authority at the end of June. After expected mergers, nearly half of the assets they hold will be managed within the top six funds.