POWERED BY MOMENTUM MEDIA
Too hard to compete for group risk
Smaller companies thinking of dabbling in group insurance should think again, as high barriers to entry and small margins make the sector increasingly a playground for big insurers.
The $3.1 billion group insurance sector is increasingly being shared among fewer and fewer insurers, according to key industry players speaking at the 2011 Conference of Major Superannuation Funds (CMSF).
The top two group insurers now hold approximately 33 per cent of the market, while the top four have increased their share from 54 to 64 per cent — a total of $1.8 billion in premiums, up from $1 billion in 2007.
Damien Mu, chief distribution and marking officer for AIA, said he found the figures unsurprising as he was seeing a specialising of group risk in the market.
“Group risk used to be seen as a poorer cousin, but now there is a genuine need for specialisation, with a need for infrastructure, separate investment and products and services, as well as technology to support the group insurance channel,” he said.
Head of group market and actuarial at OnePath, Robin Knight, said he felt that as the sector went through specialisation, it was being faced with the need to make big investments in technology.
“It’s almost an all or nothing. Are you going to spend the $20 million plus to play in that market?”
“It’s harder for the smaller players faced with those decisions to get the scale to justify the spending for specialist services. It’s a lot easier if you are a bigger player to spread the cost of the technology across different areas of the business,” Knight said.
AUTHOR
Ashleigh McIntyre
Recommended for you
The Super Members Council has outlined a bold reform plan to boost productivity, lift retirement savings, and unlock super’s full potential.
Women beginning their careers in 2025 could retire with hundreds of thousands of dollars more in super due to the 12 per cent super guarantee rate, HESTA modelling shows.
The two funds have announced the signing of a non-binding MOU to explore a potential merger.
The board must shift its focus from managing inflation to stimulating the economy with the trimmed mean inflation figure edging closer to the 2.5 per cent target, economists have said.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
88.01 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.46 3 y p.a(%)
4
Pengana High Conviction Equities B
39.12 3 y p.a(%)
5
Pengana High Conviction Equities A
39.05 3 y p.a(%)
