Home / Local / Business pack facing ‘murky’ future: Macquarie
27 July 2020
The business pack sector is facing a “murky outlook” as business interruption (BI) claims and coronavirus shutdowns take their toll, according to a new report from Macquarie Research.
The report says BI is “the elephant in the room” and such cover is included in 35-40% of business pack policies.
Macquarie Research says Australia’s general insurers could take a $535 million hit on coronavirus-related business interruption (BI) claims, even if all court challenges go the industry’s way.
“Our analysis concludes a $535 million market loss could result if all court cases were ruled in favour of insurers and losses run for 18 months.”
Macquarie says the figure is “one of many possible scenarios” and excludes claims from the corporate and global segment.
IAG has a 22% market share in business pack, followed by Suncorp and QBE on 19%.
Macquarie Research says the business pack segment is reliant on continuing government stimulus to support growth and employment, and warns that profitability is likely to dip.
“As affordability, claims uncertainty and policy volume growth challenges coincide, we could see one of the profitability mainstays in Australian commercial lines market tip into losses,” it says.