Brokers report ‘modest increases’ in premiums

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26 July 2010

A new survey of brokers has revealed most observed moderate increases of 1%-9% in commercial lines in the June 30 renewal period, while personal lines policies rose by 10%-30%.

The National Insurance Brokers Association (NIBA) survey of 120 members found 66% reported premium increases for the majority of clients, down from 72% last year.

Some 26% of the brokers reported no change in premiums this year, while 8% saw a decrease.

NIBA CEO Noel Pettersen says the increases were expected following the significant losses underwriters have experienced, including claims totalling more than $1 billion for the Victorian bushfires in February last year and more than $2 billion for the severe storms in Melbourne and Perth in March this year.

“The modest increases across commercial lines indicate prudent underwriting of risks over the past 12 months and strong competition among underwriters.”

Most brokers reported premium increases of 1%-9% for public liability, business interruption, business pack, commercial property and product liability.

Commercial motor rates saw greater increases with 46% of brokers reporting rises of between 1%-9% and 24% reporting a rise of 10%-30%.

Directors’ and officers’ and professional indemnity remained flat after significant increases during the global downturn.

The big claims experience in personal lines resulted in 58% of respondents reporting increases of 10%-30% for domestic policies, including home and motor.

The NIBA survey follows a report by Marsh this month that found conditions had softened in some areas of commercial lines, including property and public liability rates for large corporates.

In judging the hardness of the market with 10 as hardest, 89% of the NIBA brokers rated the commercial market between 4 and 7, while 86% rated the domestic market between 5 and 8.