The consolidation that has happened in the life insurance sector recently, particularly over the past year, has not been seen to have diminished competition, according to a report in Super Review.
When the Australian superannuation industry kicked off 2017, superannuation funds knew that there were five main group insurance providers – TAL, AIA Australia, CommInsure, MetLife and MLC Life. Since then, AIA Australia has nearly completed the transaction which will see it acquire CommInsure, that Zurich is in the process of acquiring the ANZ One Path business and that, having secured the QBE’s life insurance business, new player Integrity Group is seeking to gain a foothold. At the same time, Suncorp is considering the sale of its life insurance business while AMP is leaving its options open.
The bottom line is that while AIA Australia, with the acquisition of CommInsure, will have effectively supplanted TAL as the largest player in the group life space none of what has happened in the life insurance sector over the past three years can be seen as diminishing competition.
AIA Australia chief executive, Mr Damien Mu, in an interview with Super Review, does not believe there has been any diminution in competition nor does he think there is likely to be. He points to reinsurance capacity sitting at the heart of the competitive trends now emerging across the sector.
“The group life insurance market has always been competitive, however, there has been an increased appetite by more companies in the last couple of years which has been largely off the back of renewed reinsurance capacity,” he said.
TAL Chief Executive, Brett Clark, acknowledges the level of competition currently on show in the group life space, but argues that it is attributable to a range of factors.
“Competition in the group life market is generally not a function of any one insurer, but a function of many factors,” he said. “Given the size of the Australian group life market, one critical element is reinsurer capacity which is generally driven by global market conditions and not only local conditions.”
“I don’t see one insurer in or out of the market making a material difference to market conditions,” he said. “The Australian life insurance market and group life market in particular is more competitive than most financial services markets in Australia by comparison.”
“Any trustee that was looking at taking their life insurance arrangements to market should feel very confident about getting good interest from life insurers and good competitive outcomes for members.”