Despite a “tough” global result, Lloyd’s Australian business has continued growing, according to its local leader.
Chris Mackinnon, Lloyd’s general representative in Australia, said that the local business had grown over the last year despite market wide losses of more than $3.65 billion (£2 billion).
“Overall, Lloyd’s in Australia in 2017 wrote $2.3 billion in premium, which was up from $2.171 billion in 2016 so continued growth, consistent with the last four or five years’ growth that we have had, so nothing dramatic,” Mackinnon told Insurance Business.
“We are not piling into high premium, high risk areas; we are just continuing a sustainable and profitable growth strategy and $2.3 billion is spot on for where we would hope to be.”
Natural disasters in the US were to blame for Lloyd’s first loss in six years, as Mackinnon noted that Lloyd’s has 44% of its business placed in the North American markets, which were hammered by hurricanes and other natural disasters over the second half of the year. Despite Cyclone Debbie becoming the second largest natural disaster in Australian history, Mackinnon said that the Australian business saw a limited amount of claims as the storm was “not a huge hit” for Lloyd’s Australia.
He added that the firm has yet to analyse in full the Australian results, as syndicates report on class of business rather than on a country level, but the market looked at 2015 and 2016 data as part of the coverholder conference held in Sydney earlier this month. That data showed that the market’s incurred loss ratio sat around 55% which, when acquisition and administrative costs are added, would see the local arm with a combined ratio “similar or slightly below” that of the market overall, which was 114%.
“[In] 2017, I would suggest we would be quite a bit lower than what Lloyd’s was overall, obviously because of the impact of the US situation,” he said.
Mackinnon also revealed the opportunity cyber insurance presents both the Lloyd’s market and the rest of the industry, with the market expected to continue its growth on the back of mandatory breach notification legislation.
“What I can tell you on cyber for example is, in Australia over the last three years, we have gone from $6 million, to $17 million, to $30 million in premium,” Mackinnon said. “In 2017, we wrote about $30 million worth of premium on cyber and we would expect to see that continue obviously in the new environment we are trading in here.”