Companies in the life insurance sector have a contractual obligation with consumers to pay a lump sum or an annuity according to the terms of the product sold. In Australia, the four main life insurance products are death cover, total and permanent disability, income protection and trauma cover. There are three main routes through which Australians can purchase these insurance products: directly from the insurer, from an advisor or through their superannuation. In 2018, total revenues from this industry were $35.7 billion, or 1.4% of Australia's GDP. Recently, this industry has been the subject of unprecedented scrutiny by the Royal Commission, leading to expected volatility in future earnings. Many factors currently affect the profitability of this sector and this case study will examine internal rivalry and market structure, government policies, price discrimination and technological changes. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay There are a number of medium and large companies in the life insurance industry, making it a competitive market. Not perfectly competitive since the products offered will differ slightly in terms of price, premiums, etc. The life insurance industry is heavily regulated by two main government agencies; the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investments Commission (ASIC). According to IBISWorld, there are expected to be more regulations in the future, which will influence the profitability of companies, as the demand for insurance products is greatly affected by regulatory changes. The Royal Commission into Malpractice in the Banking, Superannuation and Financial Services Sector has made a number of recommendations which the Government has taken into account and which also affect the profitability of the insurance sector -life. One such reform that came into effect is the Protecting Your Retirement Package Act, where new members under the age of 25 and members with an account balance of less than $6,000 can join the instead of opting out of the insurance component of their retirement pension. In 2015, there were 14 million collective contracts out of a total of 21.9 million. Given that employer-sponsored group life insurance constitutes one of the largest customer bases in this sector, even if these recommendations were targeted at the retirement sector, the demand for insurance products will be profoundly affected. Additionally, under this law, accounts that have been inactive for 16 months or more will have their insurance canceled. Not only does this cancellation stop premium payments, decreasing demand and profitability for insurance companies, but these companies will also have to invest in technology and data analysts to identify the many portfolios that will be affected. This change indirectly increases their costs and further reduces their profitability. Government regulations can also directly affect industry costs. Based on the recommendations of the Joint Parliamentary Committee on the Life Insurance Sector in March 2018, the government recently passed into law Recommendations 9.1 and 9.3 which prohibit life insurers from “using predictive genetic information” . Previously, insurers could require potential policyholders to disclose genetic test results to ensure that the premiums they charge..