Disasters drive premiums rise
BUSINESSES and homeowners are bracing for double-digit rises in insurance premiums as the big underwriters seek to recoup losses from a string of catastrophes over the past 18 months.
BUSINESSES and homeowners are bracing for double-digit rises in insurance premiums as the big underwriters seek to recoup losses from a string of catastrophes over the past 18 months.Players such as Suncorp, Insurance Australia Group and QBE Insurance are keen to pass on price increases from their reinsurers, with the Pacific region now widely regarded as a riskier place to do business.The global reinsurance industry has been pushing through dramatic rises in premiums after being hit with as much as $US100 billion in losses ranging from floods in Australia to deadly earthquakes in Japan, New Zealand and Chile.Reinsurance is bought from global insurers to protect against large, natural catastrophe losses. While it is often the biggest single expense for general insurers, it is crucial for them to cap the cost of payouts.Insurance broker Marsh said in a briefing to clients that for most businesses the latest financial year's renewals period had resulted in premium rates ranging from 7.5 per cent to 20 per cent for most classes of property and public-liability insurance."In a number of cases, adverse loss history pushed rates significantly higher, especially for businesses that were located in Queensland, and for those that had suffered losses exceeding $10 million arising from the Queensland flood, cyclone Yasi or Christchurch earthquakes," Marsh said.Its assessment came as brokerage JPMorgan said average increases for home insurance were up 10 per cent, matching a similar rise a year earlier. JPMorgan's own survey of the market has found that commercial premiums for small to mid-sized businesses have risen as much as 15 per cent."These rate increases combined with a wind-back in policy terms and conditions suggests an industry seeking to recoup losses related to recent catastrophes, reinsurance increases and reinstatement costs," said JPMorgan's Siddharth Parameswaran.One of Australia's biggest insurers, Suncorp, recently locked in $5.8 billion of reinsurance protection for payouts linked to disasters. While Suncorp declined to disclose a figure, it is believed its reinsurance premiums are up as much as 50 per cent.