Australia's Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by a ...

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

market can be divided into roughly three components:

life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death ...

general insurance General insurance or non-life insurance policy, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determine ...

and

health insurance Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among ma ...

. These markets are fairly distinct, with most larger insurers focusing on only one type, although in recent times several of these companies have broadened their scope into more general financial services, and have faced competition from

banks A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Becaus ...

and subsidiaries of foreign financial conglomerates. With services such as disability insurance, income protection and even funeral insurance, these insurance giants are stepping in to fill the gap where people may have otherwise been in need of a personal or signature loan from their financial institution. There are apparently many companies offering insurance policies in the Australian market, but many are in fact underwritten by a limited number of insurers operating under various brand names. There are a number of large companies that present themselves as providers of insurance or financial services, such as Coles, Woolworths,

Australia Post Australia Post, formally the Australian Postal Corporation, is the government business enterprise that provides postal services in Australia. The head office of Australia Post is located in Bourke Street, Melbourne, which also serves as a post o ...

Myer Myer (stylised MYER, sometimes known as Myers) is an Australia, Australian mid-range to upscale department store chain. It trades in all Australian states and one of Australia's two self-governing territories. Myer retails a broad range of ...

RACV The Royal Automobile Club of Victoria (RACV) is a motoring club and mutual organisation. It offers various services to members, including insurance and roadside assistance. It has about 30,000 ordinary club members who have access to the lif ...

NRMA NRMA (formerly National Roads and Motorists' Association) is an Australian organisation offering roadside assistance, advocacy for motorists and road-users, motoring advice, car servicing, International Driving Permits, travel and other servic ...

, among others, but which actually only sell insurance products of other companies under its brand name. Such companies at times describe themselves as insurance companies or as providers of financial services, but are better described as insurance retailers or insurance distributors. Such companies are generally not exposed to any insurance risks, but receive a commission (generally 10-20%) on the sale of these insurance products. Behind this apparent array of insurance providers and products, there are only a small number of companies that actually provide insurance, sometimes referred to as

underwriter Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabilit ...

s, some of which offer insurance products directly to the public. Four companies account for three-quarters of the general insurance market. They are

Insurance Australia Group Insurance Australia Group Limited (IAG) is a multinational insurance company. It is the largest general insurance company in Australia, and also the largest in New Zealand through its subsidiary IAG New Zealand. IAG had its origins in the Nati ...

(IAG) with 29% of the market,

Suncorp Suncorp Group Limited is an Australian finance, insurance, and banking corporation based in Brisbane, Queensland, Australia. It is one of Australia's mid-size banks (by combined lending and deposits) and its largest general insurance group, fo ...

with 27%, QBE with 10%,

Allianz Allianz ( , ) is a German multinational financial services company headquartered in Munich, Germany. Its core businesses are insurance and asset management. The company is one of the world's largest insurers and financial services groups. The ...

with 8%. Some general insurance is provided by government schemes or government insurers. Compulsory third party (CTP) motor insurance,

worker's compensation Workers' compensation or workers' comp is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her emp ...

, disability cover, and health cover may be covered by government schemes or insurers depending on the state of residence and insurance required.

Types of insurance

Life insurance

Life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death ...

products sold in Australia include

term life insurance Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guarant ...

and disability income insurance. Australian insurers are unusual in providing lump sum total and permanent disability insurance and trauma (critical illness) insurance. Life insurers also sell superannuation investment products. Most life and related insurance is taken out through superannuation funds. Life insurance premiums paid by a superannuation fund are

tax-deductible Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income. Tax deductions are a form of tax incentives, along with exemptions and tax credits. T ...

by the fund from assessable income; while the same premium if paid directly by the individual member may not be tax deductible. Some insurance companies also offer funeral insurance, accidental death and accidental injury policies. The

Australian Securities & Investments Commission The Australian Securities and Investments Commission (ASIC) is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to pro ...

recently questioned the value of some of these policies and the methods used to sell them. The market for life insurance in Australia is worth about $44 billion.Flogging of worthless life insurance policies laid bare
''

The Age ''The Age'' is a daily newspaper in Melbourne, Australia, that has been published since 1854. Owned and published by Nine Entertainment, ''The Age'' primarily serves Victoria (Australia), Victoria, but copies also sell in Tasmania, the Austral ...

'' 15 September 2018 Life insurance in Australia is sold through intermediaries (such as brokers) as well as directly by the insurer to the public. The

and the Hayne Royal Commission have highlighted the high pressure telephone selling practices and poor product design of some direct life insurance companies.

Life insurers

The

Australian Prudential Regulation Authority The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry. APRA was established on 1 July 1998 in response to the recomm ...

(APRA) regulates life insurance companies registered under the Life Insurance Act in Australia. As at 30 June 2020, there were 28 life insurers being monitored by APRA. Between 2015 and 2020 five Australian banks,

National Australia Bank National Australia Bank (abbreviated NAB, branded nab) is one of the four largest financial institutions in Australia (colloquially referred to as "The Big Four") in terms of market capitalisation, earnings and customers. NAB was ranked 21st-la ...

, Macquarie,

Commonwealth Bank The Commonwealth Bank of Australia (CBA), or CommBank, is an Australian multinational bank with businesses across New Zealand, Asia, the United States and the United Kingdom. It provides a variety of financial services including retail, busines ...

ANZ ANZ may refer to: People * Anz (musician), a British DJ and electronic musician Banks * ANZ (bank), Australia and New Zealand Banking Group Limited, the fourth-largest bank in Australia ** ANZ Bank New Zealand, the largest bank in New Zealand ** ...

and

, divested some or all their life insurance operations. As a result, the largest three life insurance companies in Australia, TAL, AIA and Zurich, account for over 60% of total market share and are all overseas owned. Based on total risk premium inflows in the 12 months to 30 September 2020 the largest life insurance companies in Australia are (market share shown in brackets): # TAL Life (27.3%) owned by

Dai-ichi Life , or Dai-ichi Life for short, is the third-largest life insurer in Japan by revenue, behind Japan Post Insurance and Nippon Life. Founded on September 15, 1902, Dai-Ichi was one of the oldest mutual insurance companies in Japan until a motion to d ...

# AIA Australia (19.0%) owned by AIA Group # Zurich Australia (14.4%) owned by

Zurich Insurance Zurich Insurance Group Ltd is a Swiss insurance company, headquartered in Zürich, and the country's largest insurer. As of 2021, the group is the world's 112th largest public company according to ''Forbes'' Global 2000s list, and in 2011 it ran ...

# MLC Life Insurance (11.1%) owned by Nippon Life Insurance Group # AMP Life (9.8%) owned by Resolution Life Group # Westpac Life including BT Life (5.9%) owned by

Westpac Westpac Banking Corporation, known simply as Westpac, is an Australian multinational banking and financial services company headquartered at Westpac Place in Sydney, New South Wales. Established in 1817 as the Bank of New South Wales, it ...

# MetLife Insurance (4.7%) owned by

MetLife MetLife, Inc. is the holding corporation for the Metropolitan Life Insurance Company (MLIC), better known as MetLife, and its affiliates. MetLife is among the largest global providers of insurance, annuities, and employee benefit programs, wi ...

# ClearView Life Assurance (1.7%) listed on the

Australian Securities Exchange Australian Securities Exchange Ltd or ASX, is an Australian public company that operates Australia's primary securities exchange, the Australian Securities Exchange (sometimes referred to outside of Australia as, or confused within Australia as ...

General insurance

General insurance General insurance or non-life insurance policy, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determine ...

products sold in the Australian market can roughly be divided into two classes: *

Liability insurance Liability insurance (also called third-party insurance) is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims and protects the i ...

such as compulsory third party (CTP) motor insurance,

professional indemnity insurance Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance which helps protect professional advice-, consulting, and ser ...

and

public liability Public liability is part of the law of tort which focuses on civil wrongs. An applicant (the injured party) usually sues the respondent (the owner or occupier) under common law based on negligence and/or damages. Claims are usually successful when ...

insurance, business insurance; *

Property insurance Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or bo ...

such as home and contents insurance, travel insurance, and comprehensive motor vehicle insurance Provisions applying to statutorily mandated or regulated schemes, such as CTP and workers’ compensation, may differ considerably between states. Many of Australia's largest companies and governments self-insure partially or totally. There are dedicated government insurers who cover these functions in many states.

General insurers

Large general insurer groups include: *

(IAG) markets its products under brands including

, RACV, SGIO, and CGU. *

markets its products under brands including

AAMI Australian Associated Motor Insurers Limited (commonly referred to as AAMI) is an Australian general insurance provider offering car, home, CTP and business insurance. AAMI has vehicle assessment centres in Victoria, New South Wales, Queensland ...

, GIO, APIA, Just Car, Bingle, Vero, InsureMyRide, Shannons, CIL, and Terri Scheer. *

QBE Insurance QBE Insurance Group Limited is a general insurance and reinsurance company listed on the Australian Securities Exchange and headquartered in Sydney. The company employs more than 11,700 people in over 27 countries. Across its operations, QBE offe ...

* Youi Insurance, which is owned by African company

OUTsurance Holdings OUTsurance Holdings Limited, commonly referred to as OUTsurance, is a subsidiary of OUTsurance Group Limited (OUTsure, a JSE listed entity), a South African based financial services investment holding company. OUTsurance Holdings Limited was fo ...

, underwrites its own policies and markets only under Youi Insurance. * Auto & General markets its products under brands including Budget Direct, Australia Post, Virgin Money and they underwrite home and car insurance from 1Cover. It is part of the international BHL Group with headquarters in South Africa. * Allianz Australia (brands include: Club Marine and Hunter Premium Funding, and they underwrite travel insurance from 1Cover) * Hollard Insurance, markets its policies through a number of brands including Real Insurance, and Guardian. It also sells policies through agents such as Woolworths, Australian Seniors Insurance, Medibank, and others. Previous general insurers include: *

Promina Group Suncorp Group Limited is an Australian finance, insurance, and banking corporation based in Brisbane, Queensland, Australia. It is one of Australia's mid-size banks (by combined lending and deposits) and its largest general insurance group, f ...

merged with Suncorp in 2007 * SGIO and SGIC purchased by IAG *

FAI Insurance HIH Insurance was Australia's second-largest insurance company before it was placed into provisional liquidation on 15 March 2001. The demise of HIH is considered to be the largest corporate collapse in Australia's history, with liquidators es ...

HIH Insurance HIH Insurance was Australia's second-largest insurance company before it was placed into provisional liquidation on 15 March 2001. The demise of HIH is considered to be the largest corporate collapse in Australia's history, with liquidators est ...

collapsed in 2001 * MMI taken over by Allianz in 1998

Health insurance

The Australian Government provides a basic universal health cover through the Medicare scheme. Medicare is partly funded by a 2%

Medicare levy Medicare is the publicly-funded universal health care insurance scheme in Australia, operated by the nation's social security department, Services Australia. Medicare is the principal way Australian citizens and permanent residents access most ...

paid by most taxpayers. Individuals and families can take out additional

for services not covered by Medicare or for services provided in private hospitals. The

Australian taxation Income taxes are the most significant form of taxation in Australia, and collected by the Government of Australia, federal government through the Australian Taxation Office. Australian Goods and Services Tax (Australia), GST revenue is collect ...

system penalises higher income earners who do not take out private health insurance, with a Medicare Levy Surcharge of 1% to 1.5% being payable by those who do not take out private health insurance.

Travel Insurance

Regulated by the

(APRA) under the Commonwealth Insurance Act 1973. The

Government of Australia The Australian Government, also known as the Commonwealth Government, is the national government of Australia, a federalism, federal parliamentary system, parliamentary constitutional monarchy. Like other Westminster system, Westminster-sty ...

website Smartraveller recommends "Take out comprehensive travel insurance and ensure it covers you for the places you'll visit, things you'll do and any pre-existing conditions." Current travel insurance companies include: * CoverMore Travel Insurance (owned by

) * Good2Go Travel Insurance * Budget Direct * Fast Cover *

InsureandGo InsureandGo (officially known as Insure & Go Insurance Services Limited) is a British travel insurance company which is owned by AllClear Insurance. As well as the United Kingdom, InsureandGo also has operations in the Republic of Ireland an ...

* Real Insurance

Industry structure

Life insurers were traditionally mutual companies, but in the 1980s and 1990s many of them

demutualised Demutualization is the process by which a customer-owned mutual organization (''mutual'') or co-operative changes legal form to a joint stock company. It is sometimes called stocking or privatization. As part of the demutualization process, memb ...

and, until recently, the majority were owned by banks. There are four main distribution channels for life insurance, including group insurance, bank insurance, IFAs and direct channels (mainly through TV). General Insurers have a more diverse ownership structure, with more stand alone independent general insurers (although some life insurers do own general insurers). Health insurers are still predominantly mutuals when considered by numbers. However, three of the four largest health funds (by premium written) are for profit, and represent around 60% of premium written (for the year to 30 June 2018). The largest private health fund by premium is Bupa, which is owned by

Bupa Bupa , legally British United Provident Association Limited, is an international health insurance and healthcare group with over 38 million customers worldwide. Bupa's origins and global headquarters are in the United Kingdom. Its main countrie ...

UK, a not for profit entity. The next largest private health provider is

Medibank Private Medibank Private Limited, better known as simply Medibank, is one of the largest Australian private health insurance providers, covering 3.7 million people in 2021. Medibank initially started as an Australian Government not-for-profit insurer i ...

, which was owned by the

, but was privatised in 2014–15.

Regulation

The prudential aspects of general, life and health insurance (solvency etc.) are regulated by the

(APRA). Matters relating to advice or disclosure of insurance products sold are regulated by the

(ASIC). The

Australian Competition & Consumer Commission The Australian Competition and Consumer Commission (ACCC) is the chief competition regulator of the Government of Australia, located within the Department of the Treasury. It was established in 1995 with the amalgamation of the Australian Tra ...

(ACCC) also has a regulatory role with respect to

competition law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...

. In certain states, various bodies also have powers in regulating certain types of statutory insurance. For example, in

New South Wales ) , nickname = , image_map = New South Wales in Australia.svg , map_caption = Location of New South Wales in AustraliaCoordinates: , subdivision_type = Country , subdivision_name = Australia , established_title = Before federation , es ...

the State Insurance Regulatory Authority regulates Compulsory Third Party motor liability insurance. In many cases these bodies have powers regarding premium rating and reinsurance rules. The primary federal legislation is: *

Life Insurance Act 1995 Life is a quality that distinguishes matter that has biological processes, such as signaling and self-sustaining processes, from that which does not, and is defined by the capacity for growth, reaction to stimuli, metabolism, energy tran ...

(life insurance prudential regulation) * Insurance Act 1973 (general insurance prudential regulation) * Health Insurance Act 2007 (health insurance prudential regulation and consumer protection) *

Corporations Act 2001 The ''Corporations Act 2001'' (Cth) is an Act of the Parliament of Australia, which sets out the laws dealing with business entities in the Commonwealth of Australia. The company is the Act's primary focus, but other entities, such as partner ...

((especially Ch 7) consumer protection in respect of insurance policies) *

Insurance Contracts Act 1984 Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

(consumer protection in respect of insurance policies) Other legislation which affects the industry includes: * A New Tax System (Goods and Services Tax) Act 1999 (taxation rules in respect to insurance e.g. Division 78) * Privacy Act 1988 (The National Privacy Principles) Further regulations include: * The General Insurance Code of Practice which all general insurer signatories agree to self-regulate under. *

Payment Card Industry Data Security Standard The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard used to handle credit cards from major card brands. The standard is administered by the Payment Card Industry Security Standards Council and its use i ...

(PCI DSS)

Industry bodies

The main industry bodies are: * Insurance Council of Australia which represents general insurers. * Financial Services Council * Australian and New Zealand Institute of Insurance and Finance * Underwriting Agencies Council * Institute of Actuaries of Australia *

ACORD The Association for Cooperative Operations Research and Development (ACORD) is a non-profit organization in the insurance industry. ACORD publishes and maintains an archive of standardized forms. ACORD has also developed a comprehensive library of ...

(Association for Cooperative Operations Research and Development) is the global standards-setting body for the insurance and related financial services industries. ACORD has standards for both General Insurance and Life Insurance and has been working with the Australia and New Zealand insurance industry since 2007 to develop electronic messaging standards to support seamless information exchange between insurance business partners. * Australasian Institute of Chartered Loss Adjusters (AICLA) which represents qualified loss adjusters * Private Healthcare Australia * Australasian Life Underwriting Claims Association (ALUCA)

References

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