About 89% of Australia’s growing army of underwriting agencies see growth potential in their markets, up one point from last year, according to an annual survey.

The proportion who think new entrants will provide a fierce challenge fell 27 points to 33% and fewer than half believe strong competition makes life difficult, down six points.

“Underwriters remain highly optimistic and see potential in harvesting demand in their current markets,” the Underwriting Agencies Council CEO survey report says. 

“The perceived threat from new entrants is receding and rated as the least concern.”

The survey was conducted by the Underwriting Agencies Council and insurance technology group Gratex International, and includes participants from New Zealand.

Some findings suggest that despite their confidence about the market’s growth potential, some underwriting agencies are rethinking their strategies and easing up on diversification.

Only 22% rank entering new market segments as critical or very important, down from 45%, and the proportion planning to introduce new products to customers fell 11 points to 47%.

“We are delighted to see a thriving industry taking more and more advantage of automation and digital transformation,” Gratex MD Marian Korcek said. 

“However, looking at the trends, I would caution about the slowing of innovation and new market entry appetite. The tide will turn in a couple of years.

“Together with the lightning-fast advancement of technology, especially Big Data, business and artificial intelligence, the industry must be ready for unprecedented change already on the horizon.”