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Brokers report modest premium increases

The survey of members, completed after the June 30 renewals period, found that while the majority of brokers reported increases of 10-30% for domestic policies, which include home and car insurance, there were more modest increases of less than 10% for most commercial lines of insurance.

NIBA represents 500 insurance broking firms and more than 2600 intermediaries, who handle almost 90% of the commercial insurance transacted in Australia, including a significant proportion of small and medium enterprise business. Brokers handle around $10 billion in premiums annually and place around half of Australia’s total insurance business.

The survey found that 66% of brokers reported premium increases for the majority of their clients compared to 72% last year while 26% reported no change and about 8% saw a decrease in 2010.

Asked to rate the “hardness” of the market on a scale of 1 to 10, 86% rated domestic insurance between 5 and 8 and 89% rated the commercial market between 4 and 7.

The majority of respondents (57%) described the general trend as “reasonable slight increases” across the board while 11% said their clients experienced increases only for hard to place risks and a similar proportion reported insurers cutting rates to achieve market share.

Most brokers reported premium increases of between 1% and 9% for Public Liability, Business Interruption, Business Pack (a combination of cover for small business and rural policyholders), Commercial Property, Commercial Motor and Product Liability.

Directors’ and Officers’ Liability and Professional Indemnity continued to be flat after significant increases during the height of the Global Financial Crisis.

There was some hardening of policy conditions or increases in deductibles (excesses) for a minority of renewals, mainly for domestic, landlord and farm policies.

NIBA CEO, Noel Pettersen, said the bigger increases in domestic premiums reflected the series of destructive natural disasters in the last 18 months.

“These increases were expected following the significant losses underwriters have experienced, including claims totalling more than $1 billion for each of the Victorian bushfires in February 2009, and the severe storms in Melbourne and Perth in March this year, where suburban homes and cars bore the brunt of the damage.

“The Australian insurance industry is gradually returning to profit following the big hit it took on investment earnings during the Global Financial Crisis. The modest increases across commercial lines indicate prudent underwriting of risks over the last 12 months and strong competition amongst underwriters,” Mr Pettersen said.

^ENDS

^{For further information contact Noel Pettersen on 02 9964 9400}

^{NIBA is an independent industry association representing 500 firms and more than 2600 intermediaries, who handle almost 90% of the commercial insurance transacted in Australia. Brokers play a major role in insurance distribution, handling $10 billion in premiums annually and placing around half of Australia’s total insurance business.}