Pricing structures for the risk insurance market will begin to converge over the next 15 years, according to the Rice Warner Actuaries Risk Insurance Market Projections Report 2012.
Industry super funds and employer-based risk arrangements will increase prices for the first time in years, while financial advisers attempt to separate the cost of advice from the price of risk cover insurance, it said.
Rice Warner principal Richard Weatherhead said product designs for the three key market segments – financial advisers, superannuation funds and direct distribution – had started to converge a few years ago.
"This trend will continue, with advised business being generated through traditional financial advisers, superannuation fund-based advisers and telephone-based advisers," he said.
Online insurance advice will also evolve through the introduction of scaled advice and its suitability to life insurance and self-service, according to Weatherhead.
Significant change in the risk insurance market will lead to lower growth over the next 15 years compared with the preceding 15 years, it said.
The projected 5 per cent annual growth rate after inflation will more than double the $11.3 billion market, but will fall short of the 9.8 per cent growth per annum achieved over the last 15 years, the report said.
The retail market will overtake the wholesale market in terms of market share, with retail business expected to account for 53 per cent of the market by 2027, compared to 44 per cent as at June 2012.
Employers will be keen to provide cover for employers, often outside the traditional super arrangements, which will grow the corporate stand-alone risk market by 5.8 per cent per annum in real terms, the report said.
The growth of risk insurance sold through personal superannuation will be propelled beyond its previous growth levels to 5.5 per cent due to the recent raft of "low cost" super products released by the banks to compete with not-for-profit funds, the report said.
Originally published on Money Management.
