Mykhailo Arych

Department of Finance, National University of Food Technologies,

Ukraine

mykhailo.arych@gmail.com

General trends and competitiveness of Australian life insurance industry

Walter Darcy

Consultant, Commonwealth bank of Australia,

Australia

walter.darcy@cba.com.au

Abstract. This paper considers financial and economic indicators of Australian life insurance industry. The analysis shows the main characteristics of the current life insurance market in Australia and its factors (determinants) that will guide the life insurance market in the future. The authors have defined and calculated the main indicators of competitiveness for Australian life insurance industry (growth rates of the life insurers number’; density of insurance; penetration rates; concentration ratios; Herfindahl-Hirschman index; integrated assessment of competitiveness). In this paper, we analyzed the general trends and competitiveness of Australian life insurance market for the 1997-2017 period. The results of the Herfindahl-Hirschman index calculations, based on the net policy revenue, demonstrate that Australian life insurance industry competition is high and there is a slight concentration at this market. Herfindahl-Hirschman index for other indicators shows that competition within life insurance industry is defined as weak and underdeveloped. In addition, the analysis shows that for Australian life insurance market there are statistically significant and directly proportional impacts of, firstly, population on life insurance premiums; secondly, the number of life insurers on life insurance penetration rate via gross written premium; thirdly, the number of life insurance companies on life insurance penetration rate via assets of life insurers; and, lastly, life insurance companies’ assets on gross written life insurance premiums.

Received: June, 2019

1st Revision: October, 2019

Accepted: February, 2020

DOI: 10.14254/2071-8330.2020/13-1/14

JEL Classification: G22, L41

Keywords: life insurance, competitiveness, density, penetration, concentration ratios, Herfindahl-Hirschman index, market structure, Australia