Insurance brokers are most concerned about the high levels of competition and finding and keeping staff as they head into 2013 despite the likelihood of growth in premiums in the year ahead.
Brokers also saw public and product liability insurance as being the most profitable in 2012 and the coming three years according to data released in the J.P. Morgan Taylor Fry General Insurance Barometer report.
However this perception is at odds with the sector’s profitability for 2012 with its combined ratio reaching 110 per cent. Compulsory Third Party (CTP) and Fire/ISR were also ranked in the top three and reflected their combined ratios of 89 per cent and 90 per cent respectively.
At the opposite end of the scale domestic motor vehicles and worker’s compensation in Tasmania, the ACT and Northern Territory and were regarded as the least profitable over the past year. The latter is also expected by brokers to remain as the least profitable over the next three years.
Leading the way in concerns about key business issues insurance brokers were unanimous in identifying staff training and retention as the leading issue with excess competition and the commoditisation of the sector as a concern for at least half of brokers.
J.P. Morgan senior insurance analyst Siddharth Parameswaran says the perceptions that 2012 was a better year for the insurance industry was mainly due to lower levels of catastrophe’s than in the previous year. At the same time the Australian economy is in a better position than other insurance markets which should lead to growth for insurers operating within Australia.
According to the report a two-speed market has opened up on premium rates where domestic insurance rate increases will lead those of commercial insurance, with some of the increase in domestic rates stemming from increased flood coverage that was not available previously. In the past year domestic insurance rates increased by nine per cent while commercial insurance increased by five per cent.