Rates heading up, say brokers
Insurance brokers are predicting across-the-board rate increases during the December renewals period.
While the commercial insurance market is still showing few signs of hardening, brokers contacted by insuranceNEWS.com.au late last week say they believe the ramifications of the global economic crisis are likely to bring the soft market to a more abrupt end than had been expected.
A Brisbane broker who has been in the industry for 46 years and who did not wish to be named says he expects pressure on directors’ and officers’ insurance to lead the charge as local claims caused by the crisis increase.
He says the rest of the industry will be affected.
“The financial crisis means insurance companies will have a drop off in investment income,” he said. “This will drive up insurance rates. The rates won’t move until the reinsurance renewal season is conducted in December. That’s a big one, worldwide.”
The informal phone survey of brokers around the country follows the release last week of a Macquarie Relationship Banking survey which reported brokers are upbeat about their prospects over the next year.
Melbourne suburban broker Glenn Stevens says he hasn’t seen any major increases yet, but is expecting them.
“The worldwide financial crisis is going to lead to rates going up,” he said. “The way the economy is going only leads to one conclusion.”
NSW broker David North agrees that economic conditions will drive rates up.
“We just have to sit and wait,” he said.
Mr North, GM of Abico Insurance Brokers in Wollongong, says it is important to remember rates in Australia have already gone up for people who have sustained big losses. He says those who have experienced flood losses, particularly in the mining industry, have been the hardest hit.
Mr Stevens, who is MD of Bricher Insurance Brokers, says despite the economic crisis there is still plenty of reason for the industry to be optimistic.
“There will be more people looking for cheaper deals and brokers may factor that in,” he said. “With renewals we will have to build up our existing relationships. But we are not running scared.
“The biggest threat to growth will be the economy and people being able to spend on insurance, and whether small businesses go out of business.”
Mr North says the market remains “relatively competitive”.
“The biggest threat now is the state of the economy and the worldwide recession,” he said. “That has to be the number one priority.”
Daniel Bullock, a director at Safeguard Insurance Brokers in SA, agrees. He says concerns over staff shortages and the movements of insurers are always a concern.
“But in terms of the economy, everyone’s holding their breath,” he said.
While the commercial insurance market is still showing few signs of hardening, brokers contacted by insuranceNEWS.com.au late last week say they believe the ramifications of the global economic crisis are likely to bring the soft market to a more abrupt end than had been expected.
A Brisbane broker who has been in the industry for 46 years and who did not wish to be named says he expects pressure on directors’ and officers’ insurance to lead the charge as local claims caused by the crisis increase.
He says the rest of the industry will be affected.
“The financial crisis means insurance companies will have a drop off in investment income,” he said. “This will drive up insurance rates. The rates won’t move until the reinsurance renewal season is conducted in December. That’s a big one, worldwide.”
The informal phone survey of brokers around the country follows the release last week of a Macquarie Relationship Banking survey which reported brokers are upbeat about their prospects over the next year.
Melbourne suburban broker Glenn Stevens says he hasn’t seen any major increases yet, but is expecting them.
“The worldwide financial crisis is going to lead to rates going up,” he said. “The way the economy is going only leads to one conclusion.”
NSW broker David North agrees that economic conditions will drive rates up.
“We just have to sit and wait,” he said.
Mr North, GM of Abico Insurance Brokers in Wollongong, says it is important to remember rates in Australia have already gone up for people who have sustained big losses. He says those who have experienced flood losses, particularly in the mining industry, have been the hardest hit.
Mr Stevens, who is MD of Bricher Insurance Brokers, says despite the economic crisis there is still plenty of reason for the industry to be optimistic.
“There will be more people looking for cheaper deals and brokers may factor that in,” he said. “With renewals we will have to build up our existing relationships. But we are not running scared.
“The biggest threat to growth will be the economy and people being able to spend on insurance, and whether small businesses go out of business.”
Mr North says the market remains “relatively competitive”.
“The biggest threat now is the state of the economy and the worldwide recession,” he said. “That has to be the number one priority.”
Daniel Bullock, a director at Safeguard Insurance Brokers in SA, agrees. He says concerns over staff shortages and the movements of insurers are always a concern.
“But in terms of the economy, everyone’s holding their breath,” he said.