Profits rise despite growing competition

Australian insurance profits grew 8.3 percent last financial year to a post-global financial crisis record of USD4.96 billion amid escalating competitive pressures, according to KPMG.

Rising premiums drove the gains, despite a slowdown compared with previous years, while the NSW bushfires were the only catastrophes to cost the industry more than USD150 million, the group says in its annual General Insurance Industry Review.

“Willingness to sacrifice premium revenue growth for a higher-quality portfolio appears to be a response to the increasing price competition from challenger brands and products,” Asia-Pacific Head of Insurance Accounting Scott Guse said.

“While the largest insurers continue to dominate the Australian market, several of the smaller brands have demonstrated outstanding premium growth in recent years.”

The report also warns of future competition from technology companies such as Google, Amazon and Facebook.