Zurich Financial Services is to pull out of the Australian group life insurance market.

The company will not be seeking any more new group life mandates, although it will continue to provide cover to existing contracts.

Zurich Australian Life & Investments CEO Colin Morgan says the move comes after a review of the business and local market conditions, which he describes as “challenging”.

“We entered the local group life market in 2008, believing there was an opportunity for a specialist niche player to serve the smaller end of the market,” he said.

“However, the landscape of the Australian group life market has now significantly changed and it is increasingly difficult for smaller players to offer a competitive proposition.”

The Australian group life market has been under pressure from growing claims and regulatory pressure on pricing.

“The ongoing challenges have reinforced the need for scale in this highly specialised segment, and ultimately we felt we couldn’t participate in the local group life market in a way that was sustainable, either for Zurich or our customers,” Mr Morgan said.

It is understood Zurich had a very small market share. A company spokesman was unable to provide insuranceNEWS.com.au with details of the number of mandates held by the insurer.

According to Plan For Life, Zurich’s total premium inflows for 2013 were $309 million. It does not feature in the research house’s top five insurers in the group life market.

The company could not confirm if GM Group Risk Phil Collins’ position is affected by the decision to close the business. It is saying only two positions are affected by the change.