Premiums to rise if severe weather continues
Insurers may have to raise premiums if they decide Australia’s severe weather events are the result of permanent weather change.
A KPMG report on the second half of last year says recent storms, floods and earthquakes could prompt an increase in the cost of insurance, and change the way the industry responds to these losses and how insurers manage their retentions.
Head of KPMG’s insurance group Brian Greig told insuranceNEWS.com.au insurers will have no choice but to raise premiums following the heavy impact the weather events had on the half-year results of Australia’s four largest general insurers – QBE, Suncorp, IAG and Allianz.
“It is really in the context of recent weather events, whether or not it is just an aberration or a cycle here to stay,” he said.
Mr Greig says a lot of research is now being undertaken by insurers to determine whether frequent big weather events are now a permanent feature of Australia’s climate.
The weather events in the past half year, an earthquake in NZ and the hailstorms in Sydney’s west, cost the industry an estimated $615 million, according to the Insurance Council of Australia (ICA).
Mr Greig says the past six months may have changed the risk landscape significantly and it’s imperative insurers re-examine their pricing models.
“If anyone starts looking at rate increases they’ll know they don’t happen immediately; they come through earned income,” he said.
“Certainly IAG and Suncorp have each said in their 2007 results that they are looking at increasing rates.”
He says the June renewal season will provide the next major test.
A KPMG report on the second half of last year says recent storms, floods and earthquakes could prompt an increase in the cost of insurance, and change the way the industry responds to these losses and how insurers manage their retentions.
Head of KPMG’s insurance group Brian Greig told insuranceNEWS.com.au insurers will have no choice but to raise premiums following the heavy impact the weather events had on the half-year results of Australia’s four largest general insurers – QBE, Suncorp, IAG and Allianz.
“It is really in the context of recent weather events, whether or not it is just an aberration or a cycle here to stay,” he said.
Mr Greig says a lot of research is now being undertaken by insurers to determine whether frequent big weather events are now a permanent feature of Australia’s climate.
The weather events in the past half year, an earthquake in NZ and the hailstorms in Sydney’s west, cost the industry an estimated $615 million, according to the Insurance Council of Australia (ICA).
Mr Greig says the past six months may have changed the risk landscape significantly and it’s imperative insurers re-examine their pricing models.
“If anyone starts looking at rate increases they’ll know they don’t happen immediately; they come through earned income,” he said.
“Certainly IAG and Suncorp have each said in their 2007 results that they are looking at increasing rates.”
He says the June renewal season will provide the next major test.