Why Australia's top insurers are less exposed to COVID-19 impact

Why Australia's top insurers are less exposed to COVID-19 impact | Insurance Business

Why Australia

While the top 10 players in other insurance markets are dominated by life insurers, the same can’t be said in Australia, and an insurance analyst believes this puts the country’s major players in a position that is less exposed to claims related to the coronavirus outbreak.

According to data and analytics firm GlobalData, the top four insurers in Australia (by written premiums in 2018) are non-life insurance providers. These are AAI Ltd (Suncorp), QBE Insurance (Australia) Ltd, Allianz Australia Insurance Ltd, and IAG’s Insurance Manufacturers of Australia Pty Ltd.

The only life insurer cited in the top five is OnePath Life Ltd. Meanwhile the bottom half is made up of life insurance companies TAL Life Ltd, MLC Ltd, AIA Australia Ltd, and AMP Life Ltd. Non-life insurer Insurance Australia Ltd, which is another IAG entity, sits at number seven.

“The top 10 insurers generate 71% of their business from non-life, while the remaining 29% comes from life,” noted GlobalData insurance analyst Deblina Mitra. “Life insurers are vulnerable due to an expected rise in claims due to COVID-19 and difficult conditions for investment.”

Non-life insurance providers, however, have their own exposures to contend with.

“A fall in retail sales and the resulting bankruptcies put pressure on the trade credit lines,” said Mitra. “The leading trade credit insurers are reported to have stopped issuing new products.”

Property and motor lines, on the other hand, are seeing a decline in claims due to the pandemic-induced prevalence of remote work arrangements.