Insurer reviews challenging home insurance

Insurer reviews challenging home insurance | Insurance Business

Insurer reviews challenging home insurance

Comeback company Calliden is reviewing the home insurance market on a monthly basis, conceding that rates have stayed flat.

The insurer swung black into the black reporting a net profit after tax of $2.01m for the first half of 2013, last week, a turnaround from the $0.23m loss it recorded in 2012.  

Nick Kirk, Calliden CEO and MD, told Insurance Business he was “really satisfied” with the business’ performance. He added that most lines had achieved growth but rates in home insurance stayed flat.

“It’s had some good growth in the past years due to an increase in pricing. The average premium for our home insurance doubled over the past three to four years but that tailed off in 2013 and we haven’t applied pricing increases this year. Price rises reached a level of adequacy and stayed flat.”

The situation was not much better in intermediated home insurance, suffering from a “flat to slight decline” in rates, resulting in little market growth.

Kirk said Calliden will assess the home insurance line on a monthly basis and make adjustments to prices “so that we have a good offering for brokers and so we can make a reasonable return, as we are both the insurer and the agent for our home insurance line”.

The insurance company recorded double-digit growth in its mansions and the NSW warranty business in the first half of 2013. The insurer attributed the growth of the mansions business to a refined pricing structure following the 2011 catastrophes and running a marketing campaign. Calliden and QBE are the only two players in NSW warranty business.

Explaining the success of the warranty business, Kirk said Calliden focused on providing a “good and predictable service for brokers “.

Commenting on the results overall, he added: “I was really satisfied with the results. We are more predictable and less volatile. It’s good to see a period that comes in line with expectations.”

Looking to future, Kirk noted opportunities in the distribution channel: “Changes to the distribution channel like the Steadfast float mean we are seeing an increasing corporatisation of the broker landscape,” he said. “That, coupled with technological advances means brokers will be able to compare insurer products much more easily and that presents an opportunity for insurers like Calliden which have modern systems.”