Over the past few years, the Australian life insurance risk industry has not managed to achieve growth in neither nominal nor real terms and profits have been impacted by unexpectedly higher claim costs, leading to both top- and bottom-line challenges for the industry. Growth in the Australian life insurance sector has also lagged non-life growth, as well as global life insurance growth.
With this poor growth, the Australian public is up to 60-80% underinsured. This presents a compelling opportunity for life insurers to fill this social need.
We have estimated that Australian families could have claimed $25b more for life insurance events last year were it not for underinsurance. The Australian life insurance industry could grow to more than three times its current size by addressing the under-served and underinsured segments of the market, such as the middle-income segment. Life insurers have the opportunity to reach and better serve this middle market through innovation in product, channel, network management and engagement. Success will be achieved when insurers take a system-wide view and place the social good agenda alongside their own growth ambitions.
In this paper, we consider this context and further explore how life insurers can work through options for achieving market growth, using Deloitte’s Doblin 10 types of innovation framework.