Report predicts massive growth in Australia’s general insurance market by 2027

Data and analytics firm GlobalData predicts that Australia’s general insurance market will increase from AU$86.8 billion in 2023 to a staggering AU$123.1 billion in 2027, a CAGR (compound annual growth rate) of 9.1 percent.

Increased healthcare awareness post-COVID-19 pandemic, soaring property and vehicle insurance premiums, and a raging demand for natural disaster insurance as a result of climate change are all factors that the research attributes to the projected 9.5% yearly growth in 2023 and 9.8% growth in 2024 for the Australian insurance business.

Since the downturn in 2020, the general insurance business in Australia has been on an upward trajectory, and in 2022, it recorded its best growth rate in the prior five years, with 8.1% growth. “The growth of general insurance has been supported by the increase in healthcare awareness post-pandemic and the rise in vehicle sales,” stated Sutirtha Dutta, an insurance analyst at GlobalData.

Key areas of operation
Based on premiums collected in 2023, personal accident and health insurance accounted for 34.8% of the total in Australia’s general insurance market, according to a report by GlobalData.

The significant portion of premiums paid by individuals for health and personal accident insurance is a direct outcome of the post-pandemic uptick in healthcare literacy, which in turn drove up enrollment in private health insurance, which has been on the rise for ten consecutive quarters beginning in June 2020. Private Healthcare Australia (PHA) reports that in 2022, there was a 2% increase in the number of Australians with private health insurance, reaching approximately 55% of the population.

Health insurance premiums will rise in tandem with inflation, which bodes well for PA&H plans. Inflation in Australia’s consumer price index (CPI) hit 5.2% in August 2023. Rising healthcare prices are projected to impose an additional burden on customers without coverage, supporting the demand for private health insurance. Dutta predicted that between 2023 and 2027, PA&H insurance will expand at a CAGR of 6.0%.

Motor insurance accounted for 24.8% of general insurance DWP in Australia this year, making it the second leading line of business in the industry, according to the report.

Based on data from the Federal Chamber of Automotive Industries (FCAI), new vehicle sales climbed by 10% from January to August 2023 compared to the same period in 2022. The analysis predicts that motor insurance will expand at a CAGR of 10.3% from 2023 to 2027, driven by an increase in vehicle sales.

Property insurance accounts for 24.4% of the general insurance DWP in Australia, making it the third-largest line of business in this industry this year. During the period of 2023 to 2027, experts project a CAGR of 13.6% for the expansion of property insurance.

The expansion of the Australian general insurance market is not likely to be significantly hindered by the premium increases that will drive up the cost of living and cause customers to be more choosy when choosing an insurance policy during 2023–27. A major obstacle to the profitability of general insurers in Australia, according to Dutta, will be the increasing nat-cat losses and inflation.