Northern Australian insurance premiums are reasonably priced, according to Aon Benfield’s Asia-Pacific CEO Malcolm Steingold.

He supports the Northern Australia Insurance Premiums Taskforce’s work to assess the feasibility of a mutual cyclone insurer or cyclone reinsurance pool, but adds there is “no lack of capacity and there are high penetration levels”.

While premiums in the region are higher, Mr Steingold says strong insurance penetration in the market proves they are not unreasonable.

“We are not against a government pool,” he told insuranceNEWS.com.au. “But we are for the delivery of a sound product at a reasonable price, and having a government scheme doesn’t necessarily do that.

“Pricing in northern Australia appears to be reasonable. It is more expensive, but that is because the probability of losses is higher.

“It is a study that needs to be done and we support it, but mitigation should absolutely be the priority.”

Mr Steingold says these issues and more will be discussed at Aon Benfield’s Biennial Hazards Conference on the Gold Coast on September 21.

He says alternative capital continues to flow into the reinsurance industry, with little sign of any change in the short term.

“I don’t think we will see a whole lot of investors moving away from insurance-linked securities (ILS),” he said. “The investment environment is still pretty challenging and ILS gives attractive returns compared with the alternatives.”

Mr Steingold believes the soft market is forcing reinsurers – and brokers – to become ever more inventive.

“For the industry to remain relevant it needs to be more innovative and broaden its product offering,” he said. “One of the biggest areas of opportunity is cyber. It is a new product but it is an area we are focusing on and we have had some success in placing covers.

“Terrorism is another one, and reputational risk. Any specialist area offers great opportunity.”

Mr Steingold says there is room for innovation even in catastrophe reinsurance.

“It has been around a long time but there is huge scope to develop this type of business even more. The hazards conference is really focused on understanding the future, and the interaction between practice and research.

“It has grown from an event in 1987 of just 20 or 30 people, to more than 300 people now.”

Click here for more information on Aon Benfield’s Biennial Hazards Conference.

Also see ANALYSIS