Insurance intermediary businesses in Australia are strategically positioned to leverage recent growth and fortify their foundations for future success, according to the 2024 Insurance Benchmarking Report from Macquarie Business Banking.
Macquarie Business Banking conducted a survey of 226 insurance intermediaries nationwide, including self-licensed brokers, authorised representatives, and underwriting agencies, to gather extensive insights into the industry.
The report showed a robust insurance industry, with numerous businesses ready to invest for the future and establish strong foundations to endure market fluctuations.
The findings highlighted the industry’s current resilience and positive outlook, supported by premium pricing, high retention rates, operational efficiency, and improved risk understanding among clients. Revenue and profitability have seen a steady increase across the industry since Macquarie Business Banking started benchmarking insurance intermediaries in 2009.
The survey results further showed that 58% of businesses reported net profit margins of 30% or higher, marking a significant rise from 30% in FY2018.
Andrew Knowles, national head of insurance at Macquarie Business Banking, said forward-thinking businesses are strategically investing to enhance productivity, optimise client service, and plan for future growth.
“Insurance businesses are investing in people, processes, and platforms to lay the foundations for sustained growth and scalability,” he said. “Despite economic uncertainties, our research revealed the timely opportunity for profitable businesses to invest in processes, systems, and organisational cultural changes that enhance resilience against future market fluctuations.”
He identified technology, cybersecurity, and talent management as key investment areas, with a focus on automation, digitisation, and talent retention strategies.
“To capitalise on a favourable current environment and to build strong foundations for future success, investment in technology and platforms for growth is key for insurance intermediaries,” he said. “Businesses that can leverage technology effectively can boost client and employee experiences, as well as operational efficiency. This then allows for your key assets, your people, to spend more time with new and existing clients, adding value and mitigating risk.”
Knowles highlighted the need to focus on key staff, especially in a tight labour market where attracting and retaining top talent is challenging.
Businesses with higher performance, particularly those reporting net profit margins of 30% or more, are more likely to have documented succession plans and prefer selling the business to employees.
“This aligns with the use of equity as a motivation and retention strategy for talented staff, indicating that businesses see succession as a key way to nurture their people,” Knowles said.
In other news, Macquarie Bank took the lead in rate adjustments early this year by implementing changes across its fixed and variable rates for new customers.
