The major natural and man-made events of the past decade have turned the insurance market away from being cyclical, according to Marsh Executive Director Scott Leney.

“I want to challenge the age-old notion of the insurance market being a cyclical market place subject to extreme swings,” he told the Risk Management Institution of Australasia conference in Sydney last week.

He says in the past decade 12 of the most expensive disasters ever recorded have happened in the US, and Australia has experienced storms, mining accidents and other natural disasters with claims exceeding $1 billion each.

On top of these there has been the Christchurch earthquake where the most recent reinsurance loss has been put at $NZ4 billion ($3.11 billion).

“So all the theory from past experience suggests we should have had a hard market,” he said.

“But this didn’t happen, and insurers returned to modest profitability in 2009 despite their concern about being squeezed around the margin. Based on recent third-quarter results, 2010 will be better again for most major insurers.” 

 Mr Leney says the Australian insurance business is now very competitive despite oversupply, and this has also helped the industry to defy past traditional market cycles.

“I don’t believe the market is anywhere near as cyclical as it used to be,” he said. 

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