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“Achieving rate increase at the top end is more difficult under current market conditions, but we have seen positive momentum on rates in recent months.”
Building relationships: Suncorp’s Anthony Day
investment returns remain low. “We don’t see this weaker profitability position changing for at least another year.” Despite the tough environment, IAG and Suncorp, which hold almost 38% of the market between them, have told Insurance News they’re confident of getting through unscathed. Suncorp Insurance Chief Executive Anthony Day predicts low single-digit gross written premium (GWP) growth in the personal lines space. He sees signs of premium rates stabilising across commercial lines. “We have been leading the market in pushing through rate increases,” Mr Day says. “Achieving rate increase at the top end is more difficult under current market conditions, but we have seen positive momentum on rates in recent months. “Overall, Suncorp expects the Australian market to remain competitive, with insurers focused on best-in-class risk selection. New business opportunities will continue to remain low as insurers focus on portfolio retention.” Mr Day says Suncorp is laying the groundwork for future success by investing in such innovators as US-based fintech Trov. “The rise of fintech has the potential to promote rapid change and disruption to traditional business models,” Mr Day tells Insurance News. “This partnership will help us build relationships with customers who are looking for new platforms that provide financial 18
Return on equity across short-tail classes 60% 40% 20% 0% –20% –40% –60% 2H13
1H14
2H14
Home Domestic motor
1H15
2H15
1Q16
Commercial motor Fire and ISR
Source: Deutsche Bank, APRA
services in a flexible and simple way.” At IAG, a spokesman for Chief Executive Peter Harmer tells Insurance News the group is experiencing tougher market conditions, particularly in commercial markets. “We expect GWP growth for IAG to be relatively flat for the 2017 financial year,” the spokesman says. “However, IAG overall has laid the foundations for the next three to four years, which will see the company focused on delivering world-class customer service insuranceNEWS
october/november 2016
while delivering greater efficiencies across the business.” IAG expects “modest growth” in shorttail personal lines and describes the commercial insurance market as being in a “difficult environment”. “We don’t expect to see a dramatic upturn in pricing,” the spokesman says. “However, we are encouraged by the more rational competitive behaviour we are seeing, particularly in our target segments * of SME and mid-market.”