From last year’s 3.6% growth, the motor insurance market in Australia is set to crash into a 4.4% contraction in 2020, according to analysis by data and analytics firm GlobalData.
“Automobile sales in Australia declined by 7.8% during 2018–2019 due to tighter lending conditions and lower consumer spending,” noted GlobalData insurance analyst Deblina Mitra. “New vehicle sales in July 2020 declined by 19.2% year-on-year due to the economic impact of COVID-19. These resulted in lower premium collections for motor insurers.”
In the commercial segment, GlobalData anticipates the impact to be more severe as commercial vehicle sales see an even bigger decrease.
Mitra, who believes the recent second wave of COVID-19 cases could further derail the industry’s recovery, went on to say that motor insurers in Australia are expected to face further pressure as a result of the falling vehicle sales numbers.
“To drive premium growth, insurers such as Allianz and Budget Direct are offering up to 15% discount on comprehensive motor insurance for new online policies,” said the analyst, whose camp also highlighted product innovations such as short-term car insurance and pay-as-you-go propositions from the likes of UbiCar, Real, Kogan, and Huddle.
She added that market recovery is expected to begin from 2021, although growth will likely be subdued.
