KPMG’s 2011 General Insurance Survey showed resilient performance, with gross written premiums increasing 6.7 percent to $25,661m (2010 - $24,054m), underwriting surplus increasing to $1,285m (2010: $1,161m) and overall insurance margin up at 14.6 percent (2010: 14.5%).
KPMG Insurance Partner, Ian Moyser said the severe weather events were particularly prevalent; with Cyclone Yasi, storms and floods in Queensland and Victoria adding to the overall cost of claims. These events, coupled with the New Zealand earthquakes, significantly impacted gross losses. However reinsurance provided a significant contribution to the general insurers’ results.
“Australia’s insurers have once again risen to the challenge of unprecedented natural catastrophes and delivered a resilient financial result,” Mr Moyser said.
The catastrophic loss events also impacted Australia’s general insurers’ capital coverage which fell overall. However Mr Moyser noted that the industry’s capital coverage (as at 30 June 2011) was 1.75 times higher than APRA’s minimum capital requirement. This compares to1.92 times at 30 June 2010. “The fall in coverage was influenced by the impact of the catastrophic loss events but is expected to unwind over time.”
The increased cost of claims, together with associated reinsurance costs, will see a rise in premiums in certain classes of business. "Premiums are based on the risk being covered. In a year of extreme losses, this will likely flow through to the pricing of risk and therefore the premiums policy holders pay," Mr Moyser said.
The outlook for the general insurers is still positive with robust capital coverage.
“The further catastrophic events in 2010 and 2011 have again reinforced the economic and community benefits that general insurers deliver to Australia,” Mr Moyser said.