In a statement released yesterday, Zurich said the decision follows an extensive review of the company's local group life business.
"The phased withdrawal will see Zurich close its book to new mandates immediately, whilst continuing to provide cover and support to existing clients," said the statement.
Zurich’s Australian Life and Investments chief executive Colin Morgan said: “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.
“However the landscape of the Australian group life market has now significantly changed and it is increasingly difficult for smaller players to offer a competitive proposition,” he said.
Mr Morgan noted the adverse claims experience of many large group life funds had been well documented, as had 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,” said Mr Morgan.
