Australian non-life insurers’ see reduced rates

A global trend toward softening rates is prevalent in the Australian market, causing rate reductions between 5% and 20% in large corporate risks and various other commercial lines.
According to the recent report by Standard & Poor’s, Australian nonlife insurers are continuing to show lower claims frequency across many commercial business lines, particularly liability lines. Personal lines rates remain robust with increases up to CPI expected. Intense competition and reductions in personal lines claims due to dry weather, decreasing crime rates and reduced speed limits, may further limit growth in this segment.
Regardless of declining rates, S&P’s report claims the nonlife insurance market will remain profitable in 2005. The report states consecutive quarterly underwriting profits have been stretched to three years due to underwriting profits of A$838 million in the quarter to December 2004 and a very low combined ratio of 83%. Policy terms and conditions have remained strong allowing the local market to refrain from extensive widening of terms and conditions of cover.
“Australian nonlife isurers’2005 profits to withstand softening cycle,” is available to subscribers of S&P’s direct service as well as the S&P’s website.