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25 May 2013
Rates on commercial insurance renewals at the end of the financial year can be best described as “patchy”, brokers say.
Despite insurers’ best efforts to talk the market up, brokers told insuranceNEWS.com.au that on the whole, rate rises of any significance have failed to eventuate.
“Patchy is the best word; it’s not been consistent,” JLT Australia and New Zealand CEO Leo Demer said. “Some businesses with lousy claims history got good renewals and others got hit pretty hard.”
Bob Mann, Aon’s Head of Broking and Chief Broking Officer, Pacific, describes risk selection by insurers as “discerning” and the current market as “tempered”.
“The rate increases insurers would like to get they just can’t get,” he said.
He says there is little difference between SME, corporate and global business, with good risks attracting flat to single-digit increases across all sectors.
“Some companies are trying to increase rates and other companies are actively chasing business,” broker Steve Hamill, the CEO of Brisbane-based Comsure, told insuranceNEWS.com.au.
Insurance House Group director and IBNA Chairman Gary Gribbin says rates “are all over the shop; it is impossible to run a line through it”.
Some differences have been noted between property and liability classes, with the CEO of Sydney-based broker IC Frith & Associates, Simon Cook, saying there is “still a bit of softening around the liability classes”, and Mr Gribbin depicting the liability market as “as soft as can be”.
Mark O’Reilly, a director of Melbourne broker Austbrokers Countrywide, says professional indemnity rates are “incredibly soft”, while Aon’s Bob Mann says the market for directors’ and officers’ cover remains “competitive”, with continuing appetite from an increased number of insurers.
A common theme among brokers has been the disparity in pricing between new business and renewals, with new business typically benefitting from premium cuts while renewals have been either flat or attracting small, single-digit rises.
“We’re not seeing the increases insurers have been talking about,” said Scott Hastings, Principal at Austbrokers Premier in Brisbane.
“If an insurer holds the risk they’re looking for a slight increase. If not, they’re quite keen to quote and provide competitive terms.”
Comsure’s Steve Hamill said his team would typically see one set of renewal rates from one insurer “with 10%, 12%, 15% increases and then another insurer trying to underwrite and get business”.
“It is a bit like the two-speed economy in that there is a price for renewals and a price for new business,” Mr Gribbin said. “Companies are competing for new business, but when renewing they are trying to get a rate hike.
“The rate differential, all other things being equal, is huge – say $8000 for a new client but $10,000-$11,000 for a renewal.”
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