Life risk premium growth and earnings will be subdued over the next year as super insurance opt-in and poor income product performance damages the life risk sector, says a new S&P Global ratings report.

It says Australia’s life insurance market will grow only in line with inflation as the superannuation insurance opt-in proposals affect up to 40% of total premium risk inflows in group life businesses.

The poor performance in income protection will continue to undermine earnings in life. The sector has been consistently making losses for the past four years despite aggressive remediation action, S&P says.

The volatile operating performance is seen as a key driver of domestic groups dumping their life risk operations, and the report says this trend will continue.