‘Major challenges’ for regional insurance industry

‘Major challenges’ for regional insurance industry

‘Major challenges’ for regional insurance industry Swiss Re has released its latest Sigma study which reveals that the global insurance industry “gained momentum in 2014,” thanks to improvement in developed markets, but the Australian market could be in for a deceleration in growth.

With only marginal economic improvement reported, total direct premiums written were up 3.7% to US$4.778 billion having remained level the previous year as non-life premium growth was also accelerated from 2.7% to 2.9%.

However, the latest report warns the Australian industry could be in line for deceleration as market forces cloud the horizon.

“Non-life premium growth in Oceania is expected to decelerate this year amidst a combination of benign natural catastrophe losses, low underlying claims inflation and ample capacity,” the Sigma study notes.

“An expansive range of regulatory changes present major challenges for non-life insurers in the region. For example, revised capital standards in Australia have led to a 7% increase in the non-life industry’s total ICRC.”

The report notes that non-life premium growth in the Oceania region “eased to 2.6% in 2014 from 5.0% in 2013,” with non-life premium growth in Australia growing by 2.2% in 2014 compared with 5.7% in 2013.

The report also found that certain commercial lines in the country have a patchy outlook thanks to a weaker 2014.

“Motor and personal property premium growth eased while commercial property insurance premiums declined,” the report states.

“Professional indemnity and employer liability premiums were sluggish, but growth in public and product liabilities was solid.”

The report also notes that insurers in Australia faced a 9.1% drop in after tax profit in 2014 thanks to claims related to the Brisbane hailstorm of November last year and weaker investment yields.