Rising vehicle numbers will help drive Australian commercial motor insurance revenues to about $4 billion in the next five years, according to a report by Ibisworld.

Revenues, estimated at $3.4 billion for this fiscal year, are expected to increase by an annualised 3.5% to 2019/20, while profitability is forecast to rise modestly.

“While competition among major players will place downward pressure on premiums per risk, cost-saving initiatives will cause profit margins to rise slightly,” the report says.

Increasing asset levels and investment revenues will support the rising revenue trend.

Insurers are expected to promote more services for commercial clients, such as management of repairs, roadside assistance, towage and replacement vehicles.

The report says these services are particularly attractive to larger companies, allowing them to outsource much of their fleet management and minimise the risks associated with vehicles being off the road.

Demand growth has fuelled expanded online sales platforms, particularly for low-weight vehicles, while brokers remain the key avenue for heavy haulage or large fleets.

IAG is estimated to have a 30% market share, followed by Suncorp Group with 28.3%, Allianz with 6% and QBE with 6%.

Further consolidation is forecast for the industry, with most major players owning a number of renowned brands.