Report suggests the industry is struggling due to lingering economic woes
Market research and analysis firm IBISWorld has made updates to one of its reports concerning the state of the life insurance industry in Australia. The report had initially noted that the industry has been showing signs of progress due to growing demand for traditional life insurance coverage. The firm has updated the report to show that this demand is not being reflected in the life insurance industry’s revenue performance. IBISWorld suggests that poor revenues seen throughout the industry are the result of lingering problems from the 2008 worldwide economic crisis.
Demand for policies high but revenue performance low
While the financial disaster caused significant problems all over the world, it also produced unexpected benefits. As people grew more conscious about their money, they began to feel the importance of financial security. This interest in securing a stable financial future led many consumers to life insurance, which they believed would be an adequate safety net in the event of personal calamity. Demand for life insurance policies spiked in Australia during the financial crisis, but this did little to bolster the performance of the life insurance industry’s revenues.
Life insurance industry expected to decline in 2012
The IBISWorld report expects that the life insurance industry will decline by 14.4% in 2012, dropping to a value of $55.3 billion. The firm predicts that this trend will continue for a number of years as financial concerns have an impact on investments. Life insurance relies heavily on the performance of investments. Strong returns often means strong growth in the industry. Lingering fears and trends left over from the economic disaster, however, have investment revenue to perform poorly.
Signs of improvement on the horizon
IBISWorld claims that better investment conditions are expected to bloom in the next five years. These conditions are expected to help stabilize the volatile investment market that has caused problems for the life insurance industry in Australia. As the market improves, the IBISWorld believes that the life insurance industry will begin showing signs of increased revenue performance. The firm notes that the industry is well positioned to take advantage of any growth opportunities come its way.
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