We’re taking a look at the current climate in the insurance industry and how the upcoming federal election could impact the industry for advisers and customers.
On 18 May 2019, the Liberal-National Coalition won the federal election. Throughout the election campaign, the Liberal National Party had a policy platform focused on responsible economic management, strong borders and support for Australian businesses. And with opinion polls leading up to the election predicting a Labor victory, the federal election result was a surprise to many throughout Australia. For many political commentators, the result called into question the validity of polls. Outside political commentary, its now time to take a look at how the election result will impact industries across Australia.
As insurance advisers, we’re focused on looking at how the federal election result will impact the industry, our work, and, most importantly, our clients. Here’s an overview of how the 2019 federal election result will affect the insurance industry.
In the insurance industry, one of the biggest, and perhaps most important, parts of our work is assessing risk. With the Coalition forming government following the federal election, one of the biggest risks to Australia’s property market, Labor’s proposed changes to negative gearing and capital gains tax, was avoided. Following the election, the RBA decided to cut rates in its June meeting to a record low of 1.25%, with the potential for another cut before year-end. So, how does this relate to insurance?
The federal election result and the subsequent rate cut by the RBA has provided some much-needed certainty in Australia. While the effects of the federal election result and the RBA’s rate cut will take some time to filter through the economy, a move to more accommodate monetary policy highlights policymakers big focus on reducing the economic headwinds Australia has been facing over the last 12 months. And with the unemployment rate rising from 5% to 5.2% in April, as outlined in the May release by the ABS, one of the biggest risks for Australians is rising unemployment.
While some certainty has returned to Australia with the election out of the way, the underlying risk of a slowdown in Australia’s economy is still a big risk that Australians need to consider. This is where we see cover such as income protection insurance becoming more important.
For the wider insurance industry, the implementation of the recommendations from the banking royal commission will be important to watch over the coming months. Since the federal election, coverage of recommendations from the royal commission in relation to the insurance industry has focused on fee structures for financial and retirement planning, particularly remuneration and commission structures for life insurance.
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The information in this article is of a general nature and does not take into account your financial objectives, circumstances or needs. You should consider your personal situation and requirements before making a decision. If you have concerns or questions, please contact Aspire Risk Advisers.