- Insurance in Australia
Australia has a sophisticated and well developed
insurance market, which can be divided into roughly three components:life insurance ,general insurance andhealth insurance . 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 and subsidiaries of foreign financial conglomerates.Types of insurance
Life insurance
Life insurance products sold in Australia includeterm life insurance , disability income insurance. Australian insurers are unusual in providing a lump sum Total and Permanent Disability insurance. Life insurers also sell superannuation investment products.Life insurers
Some of the life insurance companies which operate in Australia are:
*AMP Limited
*AXA
* Allianz AustraliaIn addition, life insurance is also sold by
friendly societies .General insurance
General insurance products sold in the Australian can roughly be divided into two classes:*
Liability insurance such as Compulsory Third Party (CTP) motor insurance,worker's compensation ,professional indemnity insurance andpublic liability insurance;
*Property insurance such as Home and Contents insurance, and comprehensive motor vehicle insuranceCertain types of insurance, such as CTP and worker's compensation, are statutory (i.e. are required by law), and can differ considerably by state.
General insurers
Some of the larger general insurers (and subsidiaries) are:
*Insurance Australia Group (IAG)
*Suncorp-Metway
*QBE Insurance
* Allianz AustraliaPrevious insurers include:
*Promina Group merged with Suncorp in2007
*SGIO andSGIC purchased by IAG
*HIH Insurance collapsed in2001 Health Insurance
The Australian Government provides a basic universal health insurance, Medicare. Private
health insurance in Australia is limited to those services not covered by Medicare or to services provided in private hospitals.The Australian Taxation system encourages middle to high income earners to take out Private Health Insurance. While most taxpayers pay a 1.5% Medicare Levy, an additional 1% Medicare Levy Surcharge is payable by those taxpayers who earn more than $50,000 and do not have Private Health Insurance.
Industry structure
Life insurers were traditionally mutual companies, but in the 1980s and 1990’s many of them demutualised and with a few large exceptions are owned by banks. The large remaining insurers have become “
financial services ” organisations and now derive the majority of their revenue from superannuation investment products.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. The notable exception is Medibank Private, the largest private health insurer in Australia, which is owned by the
Australian government .Regulation
:"See main article
Australian insurance law "The prudential aspects of general and life insurance (solvency etc) are regulated by the
Australian Prudential Regulatory Authority (APRA). Matters relating to advice or disclosure of insurance products sold are regulated by theAustralian Securities and Investments Commission (ASIC). TheAustralian Competition and Consumer Commission (ACCC) also has a regulatory role with respect tocompetition law .In certain states, various bodies also have powers in regulating certain types of statutory insurance. For example, in
New South Wales the Motor Accidents Authority [http://www.maa.nsw.gov.au/] regulatesCompulsory Third Party motor liability insurance. In many cases these bodies have powers regarding premium rating and reinsurance rules.Private health insurers are regulated by the
Private Health Insurance Administration Council (PHIAC) [http://www.phiac.gov.au/] .The primary legislation is:
*Life Insurance Act 1995 (Life Insurance)
*Insurance Act 1973 (General Insurance)Industry bodies
The main industry bodies are:
* Insurance Council of Australia [http://www.insurancecouncil.com.au/] which represents general insurers.
* Investment and Financial Services Association
* Underwriting Agencies Council http://www.uac.org.auee also
*
Financial system in Australia
*Insurance
*Australian insurance law
*Margin on Services (accounting method for life insurance in Australia)
*Superannuation in Australia External links
[http://www.kpmg.com.au/Default.aspx?TabID=209&KPMGArticleItemID=969 KPMG General Insurance Industry Survey 2007]
[http://www2.standardandpoors.com/portal/site/sp/en/au/page.topic/ratings_fs_ins/2,1,5,0,0,0,0,0,0,1,4,0,1,0,0,0.html Standard & Poors : Insurance Credit ratings list] ]References
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