Unauthorised foreign insurers take bigger chunk of Aussie market

Unauthorised foreign insurers take bigger chunk of Aussie market

Unauthorised foreign insurers take bigger chunk of Aussie market An increasing amount of business was placed with unauthorised foreign insurers (UFIs) between 1 July 2013 and 31 December.

Up to $802m was placed with UFIs (which are not authorised by APRA to carry on insurance business in Australia except under limited exemption arrangements), up from $761m in the same period the previous year, according to a report by APRA on general insurance statistics.

The prudential regulator writes that the increase in business being placed with UFIs was evident in business placed in Singapore for the fire and industrial special risks class of business for high value insured policyholders.

Premium placed with UFIs was concentrated in Singapore ($258m) and the UK ($329). Combined, they account for 73% of the total.
Of the premium placed with UFIs, $505m was in the fire and ISR class. In the same period the previous year, fire and ISR accounted for $440m in premium, which represented 58% of the total.

High value insured’s exemption was used by intermediaries to place $549m (or 74% of all business placed in the period), up from $537m in the same period the previous year. The custom exemption was used to place $8m of business with UFIs, down from $11m in the same period the previous year.

The total number of new or renewed policies placed in that period was 4,043, up from 3,480 new or renewed policies the previous year. The increase is said to be due to increases in the number of new or renewed policies placed using the custom exemption. This was offset by a decrease in numb of new or renewed policies placed using the atypical exemption, due in part to intermediaries who have previously written these polices not submitting data in that period.

The average premium for a new of renewed policy placed across all exemption types was $190,210 down from $215,270 in the same period last year. Most of this decrease was due to a decrease in the average premium for new or renewed policies for custom exemption policyholders. That average was $108,769 in December 2013, down from $225,642 in the same period the previous year.
There were 1,582 intermediaries licensed to conduct general insurance business. Of these, 872 intermediaries placed business directly with underwriters between 1 July 2013 and 31 December 2013. Some 28 intermediaries (2%) placed all their business directly through other Australian intermediaries. Some 682 intermediaries (43%) did not place any general insurance business in the period.

Of the 872 intermediaries that placed business directly with underwriters in the period, 833 intermediaries (96%) placed business with APRA-authorised general insurers, 237 intermediaries (27%) placed business with Lloyd's underwriters and 71 intermediaries (8%) placed business with unauthorised foreign insurers (UFIs). Many intermediaries placed business with a variety of underwriters in the period.

Intermediaries invoiced $9.9bn in premium in the period. Of this, $0.8bn (8%) was placed with UFIs. Some $1.0bn (10%) was placed with Lloyd's underwriters and $8.0bn (82%) was placed with APRA-authorised general insurers.

Intermediaries placed $7.7bn in premium with APRA-authorised general insurers that were effective in the preceding six-month period.  This represented approximately 43% of the $17.8bn of direct premium written by APRA-authorised general insurers in the same period.
 
2 Comments
  • Jak 6/03/2014 9:31:15 AM
    ...and don't loss adjusters love assessing and adjusting claims so insured; the insurer has no GST status in Australia, the insured often do not know or understand their insurer is an off-shore entity, and when it comes to claims settlement a cash methodology is usually the strategy but only after the insured has had to expend their own finances to have repairs and/or replacements facilitated - yet another undisclosed-by-their-intermediary surprise.
    Does APRA actually get paid for what they allegedly do and clearly do not understand, and has anyone employed there ever actually worked for an underwriter, or in the insurance industry in any capacity whatsoever !?
    Perhaps APRA is, or was, the basis for the ABC's 'Hollow Men' series.
    But then again, there are too many other great examples of why, based on 'advice' government receives from their faceless unelected bureaucrats, the same mistakes seem to live on in pertepuity.
    Humbug.
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  • Mr Curious 7/03/2014 9:15:05 AM
    When did they become UFI's ...I always thought they were DOFI's - Direct Offshore Foreign Insurers???
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