Australia leads way on commercial rate rises
Commercial lines premiums grew fastest in Australia in the second quarter, averaging 13.7%, according to broker Marsh’s Global Insurance Market Index.
Financial and professional liability pricing rose 23.3%, with directors’ and officers’ (D&O) cover producing the biggest rise amid a challenging claims environment and reduced capacity.
Financial institutions pricing was up 20-25% on average after several large losses and the fallout from the Hayne royal commission on financial misconduct.
Casualty and property, the two other major lines, gained 5.7% and 12.5% respectively in the June quarter.
Global commercial rates grew for the third consecutive quarter, underpinned by Australia and the UK.
The market index – a measure of commercial insurance premium change at renewal – climbed to 0.892 points from 0.89 points in the previous quarter, with prices up 1.2%.
Global property rates grew 2.3% as last year’s catastrophe losses continued to affect the market.
Casualty declined 1.4% and financial and professional increased 3.3%, driven by higher D&O pricing in multiple regions.
Data breach laws lift cyber take-up
Specialty insurer CFC says data breach notification rules have driven a 107% jump in new Australian cyber business this year.
“We attribute much of this growth to awareness of the… legislation surrounding notification, along with greater understanding of how policies respond in providing costs to manage such incidents,” International Cyber Team Leader Lindsey Nelson said.
The notifiable data breach laws, which took effect on February 22, require organisations to inform affected individuals if a breach is likely to result in serious harm.
They must also alert the Office of the Australian Information Commissioner, which says 242 breaches were reported in the three months to June after only 63 in the partial first quarter.
UK-based CFC, a Lloyd’s managing general agent, says businesses are recognising that cyber policies provide post-remediation services and training tools to prevent problems caused by human error.
Dive In unveils festival program
Tickets can now be booked for events in Australia and New Zealand for the fourth Lloyd’s Dive In Festival of diversity and inclusion.
This year’s festival is the biggest to date, with 50 events across 26 countries, including 16 in Australia and New Zealand.
Presentations, panels and networking events will be held on September 25-27 in Sydney, Melbourne, Perth, Adelaide, Brisbane, Auckland and Wellington, covering subjects including LGBTIQ+ inclusion, mental health, and gender and cultural diversity.
The theme for the festival is #time4inclusion, as the emphasis shifts from talk to action.
The second survey of diversity in the insurance industry is also under way, with results due to be presented at the festival opening in Sydney at 8am on September 25.
See ANALYSIS and a full list of events.
QBE loses NZ court appeal on quake cost sharing
New Zealand’s Court of Appeal has dismissed a QBE case arguing that Allianz should share costs for a Christchurch earthquake claim because both companies were providing cover when the catastrophe struck the city.
The earthquake that hit at 4.35am on September 4 2010 caused significant damage to a property insured by QBE under a policy due to expire at 4pm.
A broker had previously organised new cover with Allianz that commenced the day of the earthquake, without specifying a start time. The Allianz policy says it would expire at 4pm on September 4 2011.
QBE sought a 50% contribution from Allianz for the claim, arguing the policy began from midnight, so both companies were liable for costs at the time of the catastrophe.
The Court of Appeal said it was immaterial that the broker and Allianz had not discussed a specific start time, and it was accepted that the building’s body corporate never sought to obtain double insurance.
“Viewing the communications objectively, what was sought and what was agreed to be provided was a policy that incepted on the expiry of the QBE policy,” the judgment says.
Lending crackdown hits LMI premiums
The number of new lenders’ mortgage insurance premiums has contracted for three consecutive years as risk appetites shrink amid tightened lending standards.
Demand for mortgage insurance should remain subdued this year, according to an S&P Global Ratings report.
The ratings agency warns product risk remains high as prudential lending caps and tighter underwriting standards lead to soft demand in the housing market and, consequently, mortgage insurance. Declining prices, slow wage growth, high debt and a potential interest rate increase may exacerbate credit losses.
The industry carries an intermediate risk, thanks to barriers to entry, profitability and a strong institutional framework, S&P says.
It notes Australia provides a stable environment for mortgage insurers, limiting the effect of significant downturns or domestic external shocks.
AI strategies ‘require more ambition’
Insurers have been urged to fully embrace artificial intelligence (AI) to gain maximum benefit.
Accenture Insurance Lead Australia and New Zealand Ravi Malhotra says much industry AI activity is limited to improving current processes or “seeking low-hanging fruit”.
“There is value in exploring these opportunities,” he said. “However, if we were to set our ambitions a bit higher, there is potentially so much more to uncover.
“Only once we reframe what we are trying to achieve, and rethink what work needs to be done, will AI truly make an enormous difference.
“It’s not just about doing the same things differently.”
AI is an evolving technology that may herald an era of “extraordinary” benefits including faster underwriting, quicker claims settlement and improved customer experience.
But patience is key. Insurers willing to take a long-term approach to AI investment will achieve the most.
“In approaching this fundamental shift in thinking, it’s important to recognise that it won’t be achieved overnight,” Mr Malhotra said.
“It will take some time and must be done thoughtfully and strategically.”
Paperwork deters travel claims: survey
Travellers are failing to lodge claims for overseas incidents because they view the process as too laborious, a TravelCard survey has found.
Among respondents who paid for medical costs overseas, 55% did not make a claim on their return.
About 82% of travellers say they have had issues with the process, with 44% criticising claims for involving too much paperwork.
Some 32% say claims are only partially reimbursed and 31% think they take too long to settle.
TravelCard, which has introduced a policy that pays claims in real time, says 1000 people were surveyed about incidents overseas and “pain points” with insurance providers.
Travellers are most likely to claim when they are forced to cancel a trip before departing.
The most common incidents during trips are delayed flights, receiving medical treatment, losing and damaging goods and suffering thefts.