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INMAG FEB 2015_page layouts 17/02/2015 7:51 pm Page 14

Special report

growth in premium in the past few years, so its slowdown should leave a hole in GWP growth”. In commercial lines, rate trends were much weaker as well – a 6% reduction overall on the weighted average basis, falling well short of the flat result expected by participants in the 2013 JP Morgan/Taylor Fry survey. Fire and industrial special risks showed very soft trends for underwriters and brokers, averaging a 12% reduction. The report says negative commercial rates are trending for this year and next. Comments from participants in the survey that accompanies the report show most think the general insurance industry’s growth tracks close to or just below GDP growth. And that attitude overrides consideration of the many new risks and challenges the industry faces in the future. Many of the industry experts who participated in the survey see competition in personal lines as “a near-term headwind” and say growth in the long run will remain locked to GDP. The more bullish among them see higher weather-related claims arising from climate change being offset by improved risk management, new products and privatisation of government insurance schemes. What is clear is there is considerable pressure on premium rates in commercial and personal lines, with participants saying both are in the area of “lapse rates rising, premium rates falling”. Many are also concerned the pressure on commercial lines could lead to irrational rates – a trend that has been evident in previous softening markets. The survey participants predict large capacity increases in domestic motor, householders and fire and industrial special risks (ISR). “In terms of changes in profitability, it seemed that participants were most concerned about growth in capacity in fire/ISR, motor and householders,” the report says. Home and professional indemnity have shown the strongest growth in the past 20 years, with average 14

Retention rates: Commercial classes 90 88 86 84 82 80 78 76 74 72 70 2011*

2012*

2013A

Fire and ISR (commercial property) Public and product liability Workers’ compensation (TAS, NT, & ACT) Director’s & officers’

2014A

Commercial motor Workers’ compensation (WA only) Professional indemnity Weighted average

Source: JP Morgan/Taylor Fry 2015 General Insurance Barometer. Note: 2013 and 2014 use current survey data. *Prior years have been calculated based on historical movements in persistency rates with 2014 as the base

Retention rates: Domestic classes 95 90 85 80 75 70 65 60 55 50 45 2011* Domestic motor

2012* Householders

2013A CTP (NSW)

CTP (Qld)

2014A Weighted average

Source: JP Morgan/Taylor Fry 2015 General Insurance Barometer. Note: 2013 and 2014 use current survey data. *Prior years have been calculated based on historical movements in persistency rates with 2014 as the base

insuranceNEWS

February/March 2015

Profile for Insurance News (the magazine)

FEB/MAR 2015 - Insurance News (the magazine)  

The next year is shaping up to be one of the most challenging for insurers and brokers, as investment income and premium rates plummet. The...

FEB/MAR 2015 - Insurance News (the magazine)  

The next year is shaping up to be one of the most challenging for insurers and brokers, as investment income and premium rates plummet. The...