As Assistant Treasurer Mal Brough noted on Thursday, both the Australian Prudential Regulation Authority (APRA) and the Australian Competition and Consumer Commission (ACCC) have released reports which show the insurance industry is doing its bit to get liability insurance rates trending down.

APRA’s report is its first for public and products liability and professional indemnity insurance from its new National Claims and Policies Database (NCPD).

So far, the NCPD only includes data for 2003 and 2004 supplied by APRA-regulated insurers writing these lines of liability insurance.  But in the long term the database will include other insurers and will show how long-tail business claims develop.   

APRA Executive Member Steve Somogyi says the database will assist insurers to “more appropriately set premiums and monitor and reserve for claims”. It will also enable government agencies and policymakers to monitor trends in premiums and claim costs.

“Insurers will have access to industry-wide data in addition to their own information, giving them a more comprehensive, reliable and accurate picture of claim costs and trends on which to base premiums and reserve for claims,” he said.

Meanwhile, the ACCC’s fifth monitoring report on the public liability and professional indemnity insurance rates shows they dropped by about 4% during the 12 months to December 31 last year.  The regulator says insurers predicted then that rates would drop even further – a prediction confirmed by more recent reports like the National Insurance Brokers Association’s June 30 renewals survey.

The ACCC finds there was no “substantial change” in the average size of public liability claims settled last year, and the number and frequency of claims “have remained relatively stable since 2002”.  It also acknowledged that insurers’ profit from underwriting public liability declined last year.

The average size of professional indemnity claims increased by more than 60% because of a small number of high-cost claims.

The report finds most insurers “believed that tort reforms had either no or minimal impact on the number and size of professional indemnity claims in 2004. Insurers said that competition was the main driver of the fall in premiums.”

Personal injury claimants in NSW and Victoria rushed to file claims before the reforms came into effect, the ACCC report says. That meant some claims were brought forward.

“Although the net effect of reforms on the number of claims filed with courts will become clearer over the next few years, the additional data available since the ACCC’s last report shows that the number of claims being lodged with courts has remained low,” the report says.