The Australian broking industry is set to enter a stronger and more profitable five-year period, according to industry research firm Ibisworld.

Industry analyst Tim Stephen says insurance industry revenue depends on policy pricing, demand for insurance “and the popularity of agents and brokers as a medium for distributing and purchasing insurance”.

The report predicts industry revenue will grow by 2.2% a year over the next five years, to reach an estimated $12 billion in 2016/17.

It says anticipated premium increases will contribute to a 4.3% rise in industry revenue for 2011/12 to $10.8 billion.

The report puts the current number of registered insurance brokers at 2967 with 24,254 people employed in the sector.

However, the number of registered insurance brokers is expected to decline by 0.3% a year as the average company gets bigger and merger and acquisition activity continues.

Ibisworld says the weak financial and economic conditions have provided brokers with opportunities.

“With consumers feeling increasingly vulnerable to the turbulent economy, demand for income protection, death, disability and critical illness policies spiked.”

It says one of the key challenges for the industry will be how to deal with climate change and the increasing number of natural disasters.

“With insurers expected to focus intently on underwriting, brokerage firms could benefit from expanding outsourcing,” the report says, naming claims assessment and adjustment services.

It says another benefit for brokers is that going forward, there will be fewer underinsured individuals.

This is in line with the ageing of the general population, as older persons are more inclined to insure both themselves and their assets and also have the funds to do so.