The Australian general insurance industry will likely see a 5% nominal growth in gross written premium (GWP) this year, according to Swiss Re, after regulatory filings showed a first-half rise of 4.7%.

For next year GWP growth will slow down to 3%, but there is upside risk to the forecast because of a number of potentially positive developments including promising progress in the search for an effective COVID vaccine.

Swiss Re Group Chief Economist Jerome Jean Haegeli told insuranceNEWS.com.au commercial rates will continue to spike next year, lending support to the non-life sector.

“We see commercial rate hardening in the Australia market to continue into 2021,” Dr Haegeli said. “Non-life insurance business has been resilient to the COVID-19 hit.”

Elevated natural catastrophe losses and what Dr Haegeli describes as “social inflation” are the two main factors behind the strength in Australia commercial rates. Citing figures from broker Marsh, Swiss Re says commercial rates here rose 33% in the September quarter from a year earlier, way faster than the 20% posted globally.

In its latest Sigma study, Swiss Re says higher business interruption impact, natural catastrophe and liability claims worsened Australia’s combined ratio in the first-half of the year while underwriting results declined by five percentage points.

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