Leading economist Ian Harper says a growing economy and increasing demand isn’t leading to insurance premium growth as a result of international oversupply.

Speaking at the Aon Advanced Risk Finance Conference in Melbourne last week, Professor Harper, a consultant at Access Economics, told industry stakeholders that while insurance demand in Australia is strong “it’s really just a drop in the bucket relative to the world economy”.

“But the good news for us locally [is that] the Australian economy has the opposite problem to that which our friends in the US and Europe have – we have excessive growth and our problem is managing that.”

Professor Harper says Australia is in a relatively strong position in a global economy which is slowly recovering from the financial crisis in a very “patchy way”.

He says growth is very slow in both the US and Europe, and if it wasn’t for China and greater Asia pulling the Australian economy forward there would be a big problem.

“Fortunately for Australia, our economy is heavily exposed to the Chinese economy, so unsurprisingly our economy looks very different from what is being experienced in the US and Europe.”

This means insurance, unlike other financial services sectors such as banking, is experiencing a robust supply capacity.

However, this has been offset by weak demands in major parts of the economy such as the US, leading to weak to negative premium growth.