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Life and Superannuation in Australia 2008

Datamonitor
September 11, 2008
33 Pages - SKU: DFMN1905512

Abstract Table of Contents Search inside this report Related Reports

Countries covered: Australia

Introduction

Australia’s superannuation market is unique because employers must make compulsory contributions on behalf of their workers. A number of regulation changes have taken place in recent years making superannuation a highly attractive and tax friendly environment to save money.

Scope

Assesses the value and future prospects of the financial advisory industry.
Reviews the impact of changes in regulation on the superannuation market and presents details of life insurance income growth between 2003-2007.
Analyses the market shares of life insurance companies operating in Australia.

Highlights

Australia’s population is ageing quickly and over the next 40 years the proportion of the nation that is aged 65 and over is set to rise rapidly. This is one of the driving factors that will push up demand for professional retirement and investment advice.

Recent government legislation changes surrounding the superannuation market have proved highly profitable to life insurance companies. While the federal government has made changes to help encourage individuals to build up their savings, financial providers are reaping the rewards of increasing sales and assets under management.

The three largest life companies in Australia managed 66% of the total Australian assets in the industry at the end of 2007. These top three life offices were AMP, National Australia/MLC and ING/ANZ and combined they managed AUD164.2bn in statutory fund assets.Reasons to Purchase

Review life insurance market shares across ordinary life insurance products and superannuation.
Discover the ageing problem of the financial advisory market in Australia and the plans for business succession
Assess historic market data from 2003-2007 including total sales, a breakdown by product type and superannuation assets.

Overview: Catalyst; Summary; Executive Summary; Key Issue: Advisor Distribution; A large proportion of life insurance and superannuation business is generated by financial advisors; Australians are reluctant to employ the services of a financial advisor because they feel they can do it themselves; However, those individuals who have a financial advisor tend to be in a better financial position; The demand for financial planners is set to increase strongly within the next five years; An ageing population is set to fuel the demand for financial advice over the coming decades; The majority of existing financial advisors will reach retirement age over the next five to ten years creating a widespread staffing concern; Market Context; New business premiums have increased for life insurers particularly in 2007; Superannuation products account for the majority of new life insurance income in Australia; Consumers have been investing an increasing share of their superannuation in equities over the last five years; Life insurance companies have benefited significantly from the regulation changes; Competitive Dynamics; The top three life insurers accounted for more than three quarters of total new business premiums in 2007; The top three life offices manage the two-thirds of the assets for Australian policyholders; Table of Contents; Table of figures; Table of tables; Key issue: Advisor Distribution; Are financial advisors providing value to clients for their services?; A large proportion of life insurance and superannuation business is generated by financial advisors; Australians are reluctant to employ the services of a financial advisor because they feel they can do it themselves; However, those individuals who have a financial advisor tend to be in a better financial position; The majority of surveyed advisor clients are happy with their financial planner but would like to know the fees involved; The future looks secure for financial advisors as they focus on superannuation business; The demand for financial planners is set to increase strongly within the next five years; An ageing population is set to fuel the demand for financial advice over the coming decades; The majority of existing financial advisors will reach retirement age over the next five to ten years creating a widespread staffing concern; Market Context; Australian life insurance premiums increased over the 2003-2007 period; New business premiums have increased for life insurers particularly in 2007; New individual business has outperformed new group business in recent years; Superannuation products accounts for the majority of new life insurance income in Australia; Consumers investing an increasing share of their superannuation in equities over the 2003-2007 period; Superannuation and pension/annuity premiums increased strongly in 2007 as a result of legislation changes; Regulation changes have encouraged investors to save into superannuation; Employers in Australia are required to make superannuation contributions for their employees; Australian retirement savings have benefited from the recent superannuation changes; Individuals aged 60 and over can access their superannuation benefit tax-free; Limitations on concessionally taxed superannuation contributions have changed; Post- tax superannuation contributions are limited to AUD150,000 per annum; The transitional AUD1 million contribution limit served to boost fund inflows; The 50 per cent asset test exemption for the age pension was removed for complying income streams; Life insurance companies have benefited significantly from the regulation changes; Competitive Dynamics; The top few life insurance players in the industry dominate market share in Australia; The top three life insurers accounted for more than three quarters of total new business premiums in 2007; AMP, National Australia/MLC and ING/ANZ are the leading groups for new superannuation business premiums; Colonial/CBA, Westpac and ING/ANZ are the leading groups for new ordinary life insurance premiums; The top three life offices manage the two-thirds of the assets for Australian policyholders; The top three life companies in Australia had strong business growth during 2007, utilising their large distribution networks; AMP is the leading life insurance company in Australia; National Australia/MLC is the Australia's second largest life insurance provider; ING/ANZ is the third largest life insurance office in Australia
APPENDIX: Data; Methodology; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Do you use a financial planner to help with your superannuation?; Table 2: How satisfied are you with your financial advisor?; Table 3: Proportion of the Australian population aged 65 years and over; Table 4: Total new business premium received by life insurance providers, 2003-2007; Table 5: Breakdown of individual and group business premiums, 2003-2007; Table 6: Breakdown of total new life insurance premiums by product type, 2003-2007; Table 7: Breakdown of superannuation assets as of December 2003-2007; Table 8: Quarterly splits of superannuation premium income during 2007; Table 9: Market shares of life insurance companies for total new business in 2007; Table 10: Market shares of life insurance companies for total new superannuation business in 2007; Table 11: Market shares of life insurance companies for total new ordinary life insurance business in 2007; Table 12: Market share and growth of life insurance companies Australian assets, 2006-2007
List of Figures: Figure 1: Just over a quarter of surveyed Australians admit to using a financial advisor to help with their superannuation; Figure 2: The Australian population is expected to age rapidly over the coming decades resulting in an increased the need for professional retirement advice; Figure 3: Life insurers have received an increasing amount of new business over the last five years; Figure 4: The top three life insurance companies dominated new business premiums in 2007; Figure 5: The top three life offices hold the majority of Australian fund assets in 2007; Figure 6: Just over a quarter of surveyed Australians admit to using a financial advisor to help with their superannuation; Figure 7: Clients have became increasingly satisfied with the financial advice they received in 2007; Figure 8: The Australian population is expected to age rapidly over the coming decades resulting in an increased the need for professional retirement advice; Figure 9: Life insurers have received an increasing amount of new business over the last five years; Figure 10: New retail business from individuals has been strong in the life insurance market; Figure 11: Superannuation business generates the majority of new premiums for life insurance companies; Figure 12: Over half of superannuation assets were invested in equities during 2007; Figure 13: Superannuation and pension/annuity products generated rapid income growth in 2007; Figure 14: Life offices received the largest share of superannuation premiums in the June quarter of 2007; Figure 15: The top three life insurance companies dominated new business premiums in 2007; Figure 16: AMP was the market leader for new superannuation business in 2007; Figure 17: Colonial/CBA was the leading life insurer for new ordinary life insurance business premiums in 2007; Figure 18: The top three life offices held the majority of Australian fund assets in 2007

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Life and Superannuation in Australia 2008

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