IAG chief warns of rate increases
Tougher market conditions, increasing natural catastrophes and the global financial crisis are affecting insurers’ earnings, according to IAG CEO Mike Wilkins.
He told a Committee for Economic Development of Australia (CEDA) function last week that rising catastrophes and the financial crisis will batter the industry, forcing premiums to rise.
“Managing the impact of natural perils is core business for insurers,” he said. “However, out of 15 of the most significant natural perils in Australia in the past 35 years, six of them have occurred in the past three years.”
Mr Wilkins says claims frequency and inflation are hitting insurers’ earnings, along with an extended soft pricing cycle in the commercial market. Reserve releases, which supported overall profitability, have also begun to dry up.
“There are also a number of potential adverse implications for the insurance industry of the global financial crisis which have the potential to have a short-term impact on insurers’ returns,” he said.
He told a Committee for Economic Development of Australia (CEDA) function last week that rising catastrophes and the financial crisis will batter the industry, forcing premiums to rise.
“Managing the impact of natural perils is core business for insurers,” he said. “However, out of 15 of the most significant natural perils in Australia in the past 35 years, six of them have occurred in the past three years.”
Mr Wilkins says claims frequency and inflation are hitting insurers’ earnings, along with an extended soft pricing cycle in the commercial market. Reserve releases, which supported overall profitability, have also begun to dry up.
“There are also a number of potential adverse implications for the insurance industry of the global financial crisis which have the potential to have a short-term impact on insurers’ returns,” he said.