Zurich Financial Services Australia has just announced that it will close its doors to the group life insurance market, citing extremely challenging conditions as the culprit.
The decision follows an extensive review of its local group life business, which was conducted in light of the difficulties the Australian group life market is facing.
The phased withdrawal will see Zurich close its book to new mandates immediately, whilst continuing to provide cover and support to existing clients.
CEO Colin Morgan said the landscape of the Australian group life market has increasingly priced smaller players out of the game.
“We entered the local group life market in 2008, believing there was an opportunity for a specialist niche player to serve the smaller end of the market…it is increasingly difficult for smaller players to offer a competitive proposition,” he said.
Morgan noted that the adverse claims experience of many large group life funds has been well documented, as has the significant flow-on effects to premiums, reinsurance rates and reserving requirements across the overall group life market.
“The ongoing challenges have reinforced the need for scale in this highly specialised segment, and ultimately we felt we couldn’t participate in the local group life market in a way that was sustainable, either for Zurich or our customers,” he said.
However Morgan emphasised that this result is in stark contrast to Zurich’s retail life business, which is thriving and continues to grow rapidly.
The standalone decision to cull the group life service was based on a commercial outlook for a specialised segment that represents a very small part of Zurich’s Australian business, and it won’t affect any of its other offerings in the market, he said.
Staffing impacts will be limited, with only two roles immediately affected.