Australia’s general insurance industry to be worth A$99.9 billion in 2026

Data analyst GlobalData has projected that the value of the general insurance industry in Australia could rise to around A$99.9 billion (US$73.6 billion) in 2026. This represents a compound annual growth rate (CAGR) of 6.4 per cent over the next five years in terms of direct written premiums (DWP), rising from around A$73.29billion in 2021.

The increase is expected to be driven by a strong post-pandemic economic recovery. Shabbir Ansari, Senior Insurance Analyst at GlobalData, commented: “The Australian economy is expected to grow by 3.8 per cent in 2021 as compared to a decline of 2.5 per cent in 2020. In line with the economic growth, the general insurance industry in Australia grew by 6.7 per cent in 2021 as compared to the four per cent growth in 2020.”

Other driving factors for growth in the sector, which is dominated by personal accident and health, motor and property insurance, include increased vehicle sales and growing demand for policies covering natural catastrophes.

Growth will be led by personal accident and health, motor, and property insurance

Australia’s insurance sector is led by personal accident and health (PAH) insurance, which constituted over a third (36.7 per cent) of DWP in 2021. PAH insurance is expected to grow at a CAGR of 4.5 per cent between 2021 and 2026, with the segment growing by 0.7 per cent in 2021, following a decline of 0.2 per cent in 2020.

PAH insurance was supported by increased premium rates by the government amidst rising medical costs, and policies in this sector are predominantly sold as riders or additional insurance for services not covered by the public health sector.

Motor insurance, which accounted for 24.2 per cent of general insurance DWP in 2021, grew by six per cent in 2021, backed by a 14.5 per cent rise in vehicle sales. The segment is expected to grow at a CAGR of 6.4 per cent between 2021 and 2026.

Property insurance, the third largest segment with a 22.3 per cent share in 2021, is also projected to grow at a CAGR of 7.2 per cent between 2021 and 2026, due to increasing numbers of natural calamities in 2021 across Australia. The sector grew by 9.5 per cent in 2021.

“Australian general insurance industry is expected to maintain its positive growth momentum over the next five years driven by strong economic recovery,” Ansari added. “The profitability of insurers, however, will remain clouded due to escalating losses from increased frequency of natural calamities and rising medical costs.”