The performance of the Insurance Brokerage industry in Australia depends on three things: policy pricing, demand for insurance, and the popularity of agents and brokers as a medium for distributing and purchasing insurance. With prices on the rise and demand rebounding with the economy, the industry is set to emerge healthily out of a slow period. However, insurance agents and brokers face intensifying competition from underwriters and banks. June 15, 2012
The Insurance Brokerage industry is a vital player in the insurance market and is beneficial to both consumers and insurers. Tim Stephen, “industry revenue depends on three things: policy pricing, demand for insurance and the popularity of agents and brokers as a medium for distributing and purchasing insurance”. Brokers and agents retain a portion of the premium of insurance policies sold. As such, anticipated insurance price increases will contribute to a forecast 4.3% rise in industry revenue for 2011-12, to $10.8 billion. With prices on the rise and demand rebounding with the economy, the industry is set to emerge healthily out of a slow period. Industry revenue is expected to grow by just 1.6% per annum in the five years through 2011-12.
However, the Insurance Brokerage industry faces intensifying competition from underwriters and banks. Underwriters are investing in online sales capabilities and new sales channels (e.g. bancassurance, which is selling insurance through banks) to reduce their reliance on agents and brokers. Brokers are guarding their distribution share by providing knowledge-intensive services to augment traditional insurance policy sales, and by focusing on more profitable markets such as the commercial segment. Looking forward, the industry is forecast to enter a stronger five-year period. Stephen adds, “industry performance will be solid as premium prices rise and many brokers consolidate to save costs on administration”. Insurance Brokerage industry as having a low level of concentration. There are a large number of very small firms operating in the industry that do not have the resources or expertise to service large clients and/or clients that require specialist services, such as risk consultation in addition to regular broking services. Merger and acquisition activity has increased in recent years, indicative of an industry that is in the mature stage of its economic life cycle. Report Key Topics
This industry includes individuals and businesses that act primarily as agents or brokers in selling annuities and insurance policies. Industry participants earn commission income, mostly as a percentage of the premium of insurance policies sold. They also earn fee income for the provision of risk management consulting and claim assessment and adjustment services...With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions...For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.
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