Claims payouts for professional indemnity (PI) and public and product liability fell in 2020 from the preceding year, according to Australian Prudential Regulation Authority (APRA) data released today.

PI claims payments dropped 10.2% to $977 million and public and product liability 6.8% to nearly $1.13 billion.

The figures in the National Claims and Policies Database refer to non-facility business underwritten by APRA-regulated general insurers.

The number of claims for which PI payments were made went down 2.2% to 18,143 and for public and product liability it declined 1.4% to 34,953.

PI gross premium increased 17% to almost $2.62 billion in the 2020 underwriting year from 2019 and public and product liability recorded a 7.5% rise to $2.91 billion.

The database also provided figures for Lloyd’s Australia but APRA says it is difficult to compare them with other insurers given the specialist nature of the Lloyd’s market which underwrites larger and more complex risks at higher premiums.

Lloyd’s PI claims payments for non-facility business fell 18% to $88 million but the number of claims for which payments were made rose 46% to 441.

For public and product liability the claims payments went up 4.6% to $83 million and the number of claims for payments made rose 29.1% to 674.

PI gross premium reached $521 million in the 2020 underwriting year and for public and product liability it totalled $131 million. The APRA data did not provide 2019 figures.

For facility business Lloyd’s recorded $459 million in gross premium and a 14.3% rise in claims payments to $425 million.

APRA also released claims development data for long, short-tail classes in a separate update last week.

In the long-tail classes, compulsory third party (CTP) motor recorded an estimated ultimate loss ratio of 84.4% for the 2021 accident year, $3.3 billion in gross earned premium, $2.79 billion in gross ultimate cost and $112 million in gross claim payments.

APRA says in the 2021 financial year prior year reserve levels remained largely unchanged, with the only significant reserve release occurring in the 2020 accident year.

“This could be explained by the NSW CTP scheme reforms that came into effect in 2017,” the regulator says.

In other long-tail classes, public and product liability’s ultimate loss ratio was 51.9%, gross earned premium came to $3.04 billion, gross ultimate cost $1.58 billion and gross claim payments $96 million.

PI had an ultimate loss ratio of 66.7%, $3.19 billion in gross earned premium, $2.13 billion in gross ultimate cost and $129 million in gross claim payments.

In the short-tail classes, houseowners/householders posted an ultimate loss ratio of 62.1%, gross earned premium of $10.18 billion, gross ultimate cost of $6.33 billion and gross claim payments of $3.32 billion.

Domestic motor had an ultimate loss ratio of 60.7%, gross earned premium of $10.96 billion, gross ultimate cost of $6.65 billion and $4.87 billion in gross claim payments.

Fire and industrial special risk (ISR) recorded an ultimate loss ratio of 59.3%, gross earned premium of $6.39 billion, gross ultimate cost of $3.79 billion and gross claim payments of $987 million.

APRA says the estimated ultimate loss ratio of 59.3% for the 2021 accident year is lower than the 10-year average of 69.6%.

The spike in the ultimate loss ratio for the 2020 accident year was driven by revised provisions for pandemic-related business interruption (BI) claims at the end of December 2020, the regulator said.