Banks and challenger insurers are predicted to continue chipping away at big players’ share of the general insurance market in the next three years, according to Macquarie analysts.
According to the specialist investment bank’s forecast, challenger brands could take 13% of the general insurance market in the next three years while banks could reach 10%. This translates to a 6 percentage point increase from a combined market share of 17.2%.
“This equates to about $3.8bn of GWP flowing away from IAG
by full-year 2018,” Macquarie told clients, as quoted by The Australian
Macquarie said several challenger brands are already stealing away the market positions of major players, the “most successful” of which is Youi Australia.
The insurer, which is owned by South Africa’s Rand Merchant Investment Holdings, has ongoing “exceptional” GWP growth and signs that it is “approaching scale,” according to Macquarie.
The bank’s analysts found that Youi’s share of the home and personal motor market has grown to 2.6%, up from 2.2% on a year earlier and from 1.6% in two years.
While challengers like Youi have posted recent growth, some big insurers have not reported good news. IAG
has announced that its first half-year GWP dropped from $5.6 billion to $5.5 billion while Suncorp
revealed a $100 million profit dip.
“After discussions with industry participants, we conclude all carriers with traditional offerings are struggling to grow with challenger brands and banks winning share,” The Australian
quoted Macquarie as saying.