It’s softer, but not that much softer… Premiums are unlikely to fall soon despite the best half-year figures in two decades, according to KPMG’s 2004 general insurance industry survey.

Insurance partner Andries Terblanche says policyholders shouldn’t expect big reductions because higher profits won’t necessarily translate into lower premiums.

“Although the general insurers have had a good year, it is the first really positive underwriting result in many years and they need to sustain it before considering reductions in premiums,” he said.

Dr Terblanche says the bumper results announced in this reporting season are still overshadowed by the underwriting losses incurred in previous years – even if HIH results are excluded.

The survey also noted insurers are setting premiums that in general terms are neither excessive nor inadequate.

“They are rating premiums on more appropriate underwriting criteria, and they are not looking at investment earnings to compensate for poor underwriting decisions,” Dr Terblanche said.

“While this won’t give respite to policyholders it will provide them the improved security of knowing that when they need their claims paid, their insurer should be in a healthy position to do so.”