“Flat to slightly improved” financial outcomes are the tip for most Australian insurance brokers in the near future, while New Zealand brokers are finding the going a little harder.

Commenting on a Fitch Ratings report that sees a relatively stable period ahead for US brokers, National Insurance Brokers Association (NIBA) CEO Noel Pettersen says higher levels of new business growth will hold the key to better outcomes in Australia.

“NIBA can say anecdotally that the bigger brokers have all been very diligent about expense control, particularly in direct expenses over the past year and this will have a positive effect on what would otherwise be a fairly flat time for everyone,” Mr Pettersen told insuranceNEWS.com.au.

“The small-to-medium brokers have also been experiencing expense control in using their cluster groups and alignments to minimise expense and improve process efficiency.”

He says there have been some recent signs of slight rate increases occurring more frequently, although the market remains in a soft-to-stable area of the cycle.

Insurance Brokers Association of New Zealand CEO Gary Young describes the outlook for brokers across the Tasman as “relatively flat” as the insurance industry feels the flow-on pain of the global financial crisis.

“You get the feeling now that brokers are starting to feel some impact with renewals,” he told insuranceNEWS.com.au. “Some clients are either disappearing or not doing so well.”

He says better conditions for the NZ insurance industry are likely to lag behind improved economic conditions.

The Fitch report says profitability for US brokers remained relatively stable last year, in spite of a continued softening of the commercial insurance market and overall challenging global economic conditions.

“Fitch expects overall industry profitability to be flat to modestly improved in 2010, but organic revenue growth and meaningful operating margin improvement could continue to prove elusive,” the ratings agency noted.

It says many brokers have adapted to the tougher operating environment by “right-sizing” their operating platforms through reducing headcount and streamlining operating systems.

Fitch anticipates sufficient cashflow to support debt-servicing requirements but brokers are likely to fall well short of peak profitability levels last seen in 2002 and 2003.