Demand for natural catastrophe protection is one factor driving insurance penetration
The general insurance industry in Australia is projected to grow at a compound annual growth rate (CAGR) of 6.4% from AUD73.29bn ($54.6bn) in 2021 to AUD99.87bn ($73.6bn) in 2026, in terms of direct written premiums (DWP), according to GlobalData.
It expects strong economic recovery and growing demand for natural-catastrophic (nat-cat) policies to support the growth of the Australian general insurance industry during the review period.
Shabbir Ansari, senior insurance analyst at GlobalData, comments: “Australian economy is expected to grow by 3.8% in 2021 as compared to a decline of 2.5% in 2020. In line with the economic growth, general insurance industry in Australia grew by 6.7% in 2021 as compared to the 4.0% growth in 2020.”
Property insurance is the third-largest segment with 22.3% share in 2021. The segment grew by 9.5% in 2021, driven by the demand for natural catastrophes policies. Increased number of natural calamities in the last two years, such as hailstorms, bushfire and floods, have prompted insurers to increase the price for these policies. Property insurance is expected to grow at a CAGR of 7.2% during 2021-2026.”
Ansari concludes: “Australian general insurance industry is expected to maintain its positive growth momentum over the next five years driven by strong economic recovery. The profitability of insurers, however, will remain clouded due to escalating losses from increased frequency of natural calamities and rising medical costs.”